Correlation Between China Vanke and China Overseas
Can any of the company-specific risk be diversified away by investing in both China Vanke and China Overseas 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 Vanke and China Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Vanke Co and China Overseas Land, you can compare the effects of market volatilities on China Vanke and China Overseas 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 Vanke with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Vanke and China Overseas.
Diversification Opportunities for China Vanke and China Overseas
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and China is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding China Vanke Co and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and China Vanke 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 Vanke Co are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of China Vanke i.e., China Vanke and China Overseas go up and down completely randomly.
Pair Corralation between China Vanke and China Overseas
Assuming the 90 days horizon China Vanke Co is expected to generate 0.37 times more return on investment than China Overseas. However, China Vanke Co is 2.71 times less risky than China Overseas. It trades about 0.17 of its potential returns per unit of risk. China Overseas Land is currently generating about -0.21 per unit of risk. If you would invest 95.00 in China Vanke Co on August 28, 2024 and sell it today you would earn a total of 4.00 from holding China Vanke Co or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Vanke Co vs. China Overseas Land
Performance |
| Timeline |
| China Vanke |
| China Overseas Land |
China Vanke and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Vanke and China Overseas
The main advantage of trading using opposite China Vanke and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Vanke position performs unexpectedly, China Overseas 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 China Overseas will offset losses from the drop in China Overseas' long position.| China Vanke vs. Alset Ehome International | China Vanke vs. Sino Land Co | China Vanke vs. Holiday Island Holdings | China Vanke vs. Sun Hung Kai |
| China Overseas vs. Longfor Group Holdings | China Overseas vs. Sun Hung Kai | China Overseas vs. Country Garden Holdings | China Overseas vs. Sino Land Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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