Correlation Between China Vanke and Yanlord Land
Can any of the company-specific risk be diversified away by investing in both China Vanke and Yanlord Land 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 Yanlord Land 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 Yanlord Land Group, you can compare the effects of market volatilities on China Vanke and Yanlord Land 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 Yanlord Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Vanke and Yanlord Land.
Diversification Opportunities for China Vanke and Yanlord Land
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Yanlord is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Vanke Co and Yanlord Land Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanlord Land Group 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 Yanlord Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanlord Land Group has no effect on the direction of China Vanke i.e., China Vanke and Yanlord Land go up and down completely randomly.
Pair Corralation between China Vanke and Yanlord Land
Assuming the 90 days horizon China Vanke is expected to generate 1.68 times less return on investment than Yanlord Land. In addition to that, China Vanke is 1.27 times more volatile than Yanlord Land Group. It trades about 0.08 of its total potential returns per unit of risk. Yanlord Land Group is currently generating about 0.16 per unit of volatility. If you would invest 657.00 in Yanlord Land Group on August 30, 2024 and sell it today you would earn a total of 405.00 from holding Yanlord Land Group or generate 61.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
China Vanke Co vs. Yanlord Land Group
Performance |
| Timeline |
| China Vanke |
| Yanlord Land Group |
China Vanke and Yanlord Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Vanke and Yanlord Land
The main advantage of trading using opposite China Vanke and Yanlord Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Vanke position performs unexpectedly, Yanlord Land 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 Yanlord Land will offset losses from the drop in Yanlord Land's long position.The idea behind China Vanke Co and Yanlord Land Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Yanlord Land vs. Viemed Healthcare | Yanlord Land vs. Southwest Gas Holdings | Yanlord Land vs. BioNTech SE | Yanlord Land vs. NRG Energy |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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