Correlation Between China Overseas and Longfor Group
Can any of the company-specific risk be diversified away by investing in both China Overseas and Longfor Group 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 Group 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 Group Holdings, you can compare the effects of market volatilities on China Overseas and Longfor Group 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 Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and Longfor Group.
Diversification Opportunities for China Overseas and Longfor Group
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Longfor is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land and Longfor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Group 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 Longfor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Group Holdings has no effect on the direction of China Overseas i.e., China Overseas and Longfor Group go up and down completely randomly.
Pair Corralation between China Overseas and Longfor Group
If you would invest 171.00 in Longfor Group Holdings on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Longfor Group Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Overseas Land vs. Longfor Group Holdings
Performance |
| Timeline |
| China Overseas Land |
| Longfor Group Holdings |
China Overseas and Longfor Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Overseas and Longfor Group
The main advantage of trading using opposite China Overseas and Longfor Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas position performs unexpectedly, Longfor Group 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 Group will offset losses from the drop in Longfor Group's 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 Group vs. China Overseas Land | Longfor Group vs. Sun Hung Kai | Longfor Group vs. Country Garden Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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