Correlation Between China Vanke and Daiwa House
Can any of the company-specific risk be diversified away by investing in both China Vanke and Daiwa House 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 Daiwa House 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 Daiwa House Industry, you can compare the effects of market volatilities on China Vanke and Daiwa House 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 Daiwa House. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Vanke and Daiwa House.
Diversification Opportunities for China Vanke and Daiwa House
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Daiwa is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Vanke Co and Daiwa House Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa House Industry 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 Daiwa House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa House Industry has no effect on the direction of China Vanke i.e., China Vanke and Daiwa House go up and down completely randomly.
Pair Corralation between China Vanke and Daiwa House
Assuming the 90 days horizon China Vanke Co is expected to generate 13.62 times more return on investment than Daiwa House. However, China Vanke is 13.62 times more volatile than Daiwa House Industry. It trades about 0.06 of its potential returns per unit of risk. Daiwa House Industry is currently generating about 0.06 per unit of risk. If you would invest 195.00 in China Vanke Co on August 24, 2024 and sell it today you would lose (96.00) from holding China Vanke Co or give up 49.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.57% |
| Values | Daily Returns |
China Vanke Co vs. Daiwa House Industry
Performance |
| Timeline |
| China Vanke |
| Daiwa House Industry |
China Vanke and Daiwa House Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Vanke and Daiwa House
The main advantage of trading using opposite China Vanke and Daiwa House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Vanke position performs unexpectedly, Daiwa House 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 Daiwa House will offset losses from the drop in Daiwa House's 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 |
| Daiwa House vs. Sino Land Co | Daiwa House vs. Sun Hung Kai | Daiwa House vs. Holiday Island Holdings | Daiwa House vs. China Overseas 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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