Correlation Between China Overseas and Longfor Properties
Can any of the company-specific risk be diversified away by investing in both China Overseas and Longfor Properties 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 Longfor Properties 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 Longfor Properties Co, you can compare the effects of market volatilities on China Overseas and Longfor Properties 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 Longfor Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and Longfor Properties.
Diversification Opportunities for China Overseas and Longfor Properties
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Longfor is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land and Longfor Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Properties 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 Longfor Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Properties has no effect on the direction of China Overseas i.e., China Overseas and Longfor Properties go up and down completely randomly.
Pair Corralation between China Overseas and Longfor Properties
Assuming the 90 days horizon China Overseas is expected to generate 1.85 times less return on investment than Longfor Properties. But when comparing it to its historical volatility, China Overseas Land is 1.6 times less risky than Longfor Properties. It trades about 0.07 of its potential returns per unit of risk. Longfor Properties Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,075 in Longfor Properties Co on August 28, 2024 and sell it today you would earn a total of 286.00 from holding Longfor Properties Co or generate 26.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Overseas Land vs. Longfor Properties Co
Performance |
| Timeline |
| China Overseas Land |
| Longfor Properties |
China Overseas and Longfor Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Overseas and Longfor Properties
The main advantage of trading using opposite China Overseas and Longfor Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas position performs unexpectedly, Longfor Properties 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 Longfor Properties will offset losses from the drop in Longfor Properties' long position.| China Overseas vs. Longfor Group Holdings | China Overseas vs. Sun Hung Kai | China Overseas vs. Country Garden Holdings | China Overseas vs. Sino Land Co |
| Longfor Properties vs. Sun Hung Kai | Longfor Properties vs. Country Garden Holdings | Longfor Properties vs. Sino Land Co | Longfor Properties vs. Sun Hung Kai |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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