Correlation Between Daiwa House and Chuangs China
Can any of the company-specific risk be diversified away by investing in both Daiwa House and Chuangs China 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 Chuangs China 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 Chuangs China Investments, you can compare the effects of market volatilities on Daiwa House and Chuangs China 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 Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiwa House and Chuangs China.
Diversification Opportunities for Daiwa House and Chuangs China
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daiwa and Chuangs is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Daiwa House Industry and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments 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 Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of Daiwa House i.e., Daiwa House and Chuangs China go up and down completely randomly.
Pair Corralation between Daiwa House and Chuangs China
Assuming the 90 days horizon Daiwa House Industry is expected to generate 0.29 times more return on investment than Chuangs China. However, Daiwa House Industry is 3.46 times less risky than Chuangs China. It trades about 0.05 of its potential returns per unit of risk. Chuangs China Investments is currently generating about -0.01 per unit of risk. If you would invest 2,140 in Daiwa House Industry on September 26, 2024 and sell it today you would earn a total of 800.00 from holding Daiwa House Industry or generate 37.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daiwa House Industry vs. Chuangs China Investments
Performance |
| Timeline |
| Daiwa House Industry |
| Chuangs China Investments |
Daiwa House and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiwa House and Chuangs China
The main advantage of trading using opposite Daiwa House and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiwa House position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.| Daiwa House vs. Sun Hung Kai | Daiwa House vs. China Overseas Land | Daiwa House vs. Mitsubishi Estate Co | Daiwa House vs. Sino Land |
| Chuangs China vs. Sun Hung Kai | Chuangs China vs. China Overseas Land | Chuangs China vs. Mitsubishi Estate Co | Chuangs China vs. Daiwa House Industry |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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