Correlation Between Country Garden and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Country Garden and Hong Kong 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 Country Garden and Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Country Garden Holdings and Hong Kong Land, you can compare the effects of market volatilities on Country Garden and Hong Kong 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 Country Garden with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Garden and Hong Kong.
Diversification Opportunities for Country Garden and Hong Kong
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Country and Hong is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Hong Kong Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Land and Country Garden 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 Country Garden Holdings are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Land has no effect on the direction of Country Garden i.e., Country Garden and Hong Kong go up and down completely randomly.
Pair Corralation between Country Garden and Hong Kong
Assuming the 90 days horizon Country Garden Holdings is expected to generate 11.85 times more return on investment than Hong Kong. However, Country Garden is 11.85 times more volatile than Hong Kong Land. It trades about 0.06 of its potential returns per unit of risk. Hong Kong Land is currently generating about 0.01 per unit of risk. If you would invest 34.00 in Country Garden Holdings on November 2, 2024 and sell it today you would lose (16.00) from holding Country Garden Holdings or give up 47.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 79.55% |
| Values | Daily Returns |
Country Garden Holdings vs. Hong Kong Land
Performance |
| Timeline |
| Country Garden Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Hong Kong Land |
Country Garden and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Country Garden and Hong Kong
The main advantage of trading using opposite Country Garden and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Garden position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.| Country Garden vs. Western Acquisition Ventures | Country Garden vs. Perella Weinberg Partners | Country Garden vs. Tradeweb Markets | Country Garden vs. Norfolk Southern |
| Hong Kong vs. Wharf Holdings | Hong Kong vs. Holiday Island Holdings | Hong Kong vs. Sun Hung Kai | Hong Kong vs. Bayport International Holdings |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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