Correlation Between China Resources and Country Garden
Can any of the company-specific risk be diversified away by investing in both China Resources and Country Garden 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 Resources and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Land and Country Garden Holdings, you can compare the effects of market volatilities on China Resources and Country Garden 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 Resources with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Country Garden.
Diversification Opportunities for China Resources and Country Garden
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Country is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings and China Resources 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 Resources Land are associated (or correlated) with Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of China Resources i.e., China Resources and Country Garden go up and down completely randomly.
Pair Corralation between China Resources and Country Garden
Assuming the 90 days horizon China Resources Land is expected to generate 1.27 times more return on investment than Country Garden. However, China Resources is 1.27 times more volatile than Country Garden Holdings. It trades about 0.05 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.04 per unit of risk. If you would invest 418.00 in China Resources Land on August 28, 2024 and sell it today you would lose (75.00) from holding China Resources Land or give up 17.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 43.23% |
| Values | Daily Returns |
China Resources Land vs. Country Garden Holdings
Performance |
| Timeline |
| China Resources Land |
| Country Garden Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
China Resources and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Country Garden
The main advantage of trading using opposite China Resources and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Country Garden 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 Country Garden will offset losses from the drop in Country Garden's long position.| China Resources vs. Sun Hung Kai | China Resources vs. China Overseas Land | China Resources vs. EGRNF | China Resources vs. Sino Land Co |
| Country Garden vs. Longfor Properties Co | Country Garden vs. China Overseas Land | Country Garden vs. Country Garden Holdings | Country Garden vs. China Resources 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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