Correlation Between China Vanke and Agile Group
Can any of the company-specific risk be diversified away by investing in both China Vanke and Agile 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 Vanke and Agile Group 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 Agile Group Holdings, you can compare the effects of market volatilities on China Vanke and Agile 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 Vanke with a short position of Agile Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Vanke and Agile Group.
Diversification Opportunities for China Vanke and Agile Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Agile is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding China Vanke Co and Agile Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agile Group Holdings 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 Agile Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agile Group Holdings has no effect on the direction of China Vanke i.e., China Vanke and Agile Group go up and down completely randomly.
Pair Corralation between China Vanke and Agile Group
Assuming the 90 days horizon China Vanke Co is expected to under-perform the Agile Group. In addition to that, China Vanke is 6.3 times more volatile than Agile Group Holdings. It trades about -0.07 of its total potential returns per unit of risk. Agile Group Holdings is currently generating about 0.03 per unit of volatility. If you would invest 486.00 in Agile Group Holdings on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Agile Group Holdings or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Vanke Co vs. Agile Group Holdings
Performance |
| Timeline |
| China Vanke |
| Agile Group Holdings |
China Vanke and Agile Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Vanke and Agile Group
The main advantage of trading using opposite China Vanke and Agile Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Vanke position performs unexpectedly, Agile 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 Agile Group will offset losses from the drop in Agile Group's long position.The idea behind China Vanke Co and Agile Group Holdings 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.| Agile Group vs. China Resources Land | Agile Group vs. Sun Hung Kai | Agile Group vs. China Overseas Land | Agile Group vs. EGRNF |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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