Correlation Between China Overseas and Country Garden
Can any of the company-specific risk be diversified away by investing in both China Overseas and Country Garden at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Overseas and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Overseas Land and Country Garden Holdings, you can compare the effects of market volatilities on China Overseas and Country Garden and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Overseas with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and Country Garden.
Diversification Opportunities for China Overseas and Country Garden
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Country is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings and China Overseas is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Overseas Land are associated (or correlated) with Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of China Overseas i.e., China Overseas and Country Garden go up and down completely randomly.
Pair Corralation between China Overseas and Country Garden
Assuming the 90 days horizon China Overseas is expected to generate 66.86 times less return on investment than Country Garden. But when comparing it to its historical volatility, China Overseas Land is 5.36 times less risky than Country Garden. It trades about 0.0 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Country Garden Holdings on August 24, 2024 and sell it today you would lose (19.00) from holding Country Garden Holdings or give up 51.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.08% |
| Values | Daily Returns |
China Overseas Land vs. Country Garden Holdings
Performance |
| Timeline |
| China Overseas Land |
| Country Garden Holdings |
China Overseas and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Overseas and Country Garden
The main advantage of trading using opposite China Overseas and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas position performs unexpectedly, Country Garden can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Country Garden will offset losses from the drop in Country Garden's long position.| China Overseas vs. Sun Hung Kai | China Overseas vs. Sun Hung Kai | China Overseas vs. China Resources Land | China Overseas vs. China Resources Land |
| Country Garden vs. Sun Hung Kai | Country Garden vs. Sun Hung Kai | Country Garden vs. China Resources Land | Country Garden vs. China Resources Land |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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