Correlation Between China Vanke and Wharf Holdings
Can any of the company-specific risk be diversified away by investing in both China Vanke and Wharf Holdings 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 Wharf Holdings 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 Wharf Holdings, you can compare the effects of market volatilities on China Vanke and Wharf Holdings 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 Wharf Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Vanke and Wharf Holdings.
Diversification Opportunities for China Vanke and Wharf Holdings
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Wharf is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding China Vanke Co and Wharf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf 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 Wharf Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Holdings has no effect on the direction of China Vanke i.e., China Vanke and Wharf Holdings go up and down completely randomly.
Pair Corralation between China Vanke and Wharf Holdings
Assuming the 90 days horizon China Vanke Co is expected to under-perform the Wharf Holdings. In addition to that, China Vanke is 3.03 times more volatile than Wharf Holdings. It trades about -0.07 of its total potential returns per unit of risk. Wharf Holdings is currently generating about -0.09 per unit of volatility. If you would invest 546.00 in Wharf Holdings on August 31, 2024 and sell it today you would lose (37.00) from holding Wharf Holdings or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Vanke Co vs. Wharf Holdings
Performance |
| Timeline |
| China Vanke |
| Wharf Holdings |
China Vanke and Wharf Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Vanke and Wharf Holdings
The main advantage of trading using opposite China Vanke and Wharf Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Vanke position performs unexpectedly, Wharf Holdings 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 Wharf Holdings will offset losses from the drop in Wharf Holdings' long position.| China Vanke vs. HUMANA INC | China Vanke vs. SCOR PK | China Vanke vs. Aquagold International | China Vanke vs. Thrivent High Yield |
| Wharf Holdings vs. Sino Land Co | Wharf Holdings vs. Hong Kong Land | Wharf Holdings vs. Holiday Island Holdings | Wharf Holdings vs. Sun Hung Kai |
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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