Correlation Between Daiwa House and Country Garden
Can any of the company-specific risk be diversified away by investing in both Daiwa House 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 Daiwa House and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiwa House Industry and Country Garden Holdings, you can compare the effects of market volatilities on Daiwa House 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 Daiwa House with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiwa House and Country Garden.
Diversification Opportunities for Daiwa House and Country Garden
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daiwa and Country is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Daiwa House Industry 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 Daiwa House 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 Daiwa House Industry 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 Daiwa House i.e., Daiwa House and Country Garden go up and down completely randomly.
Pair Corralation between Daiwa House and Country Garden
Assuming the 90 days horizon Daiwa House is expected to generate 2.63 times less return on investment than Country Garden. But when comparing it to its historical volatility, Daiwa House Industry is 7.1 times less risky than Country Garden. It trades about 0.06 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 970.00 in Country Garden Holdings on August 24, 2024 and sell it today you would lose (595.00) from holding Country Garden Holdings or give up 61.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Daiwa House Industry vs. Country Garden Holdings
Performance |
| Timeline |
| Daiwa House Industry |
| Country Garden Holdings |
Daiwa House and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiwa House and Country Garden
The main advantage of trading using opposite Daiwa House and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiwa House 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.| Daiwa House vs. Sino Land Co | Daiwa House vs. Sun Hung Kai | Daiwa House vs. Holiday Island Holdings | Daiwa House vs. China Overseas Land |
| Country Garden vs. Sun Hung Kai | Country Garden vs. Sun Hung Kai | Country Garden vs. China Resources Land | 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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