Correlation Between EGRNF and China Overseas
Can any of the company-specific risk be diversified away by investing in both EGRNF and China Overseas 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 EGRNF and China Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EGRNF and China Overseas Land, you can compare the effects of market volatilities on EGRNF and China Overseas 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 EGRNF with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGRNF and China Overseas.
Diversification Opportunities for EGRNF and China Overseas
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EGRNF and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding EGRNF and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and EGRNF 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 EGRNF are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of EGRNF i.e., EGRNF and China Overseas go up and down completely randomly.
Pair Corralation between EGRNF and China Overseas
Assuming the 90 days horizon EGRNF is expected to generate 33.79 times more return on investment than China Overseas. However, EGRNF is 33.79 times more volatile than China Overseas Land. It trades about 0.16 of its potential returns per unit of risk. China Overseas Land is currently generating about 0.07 per unit of risk. If you would invest 0.30 in EGRNF on August 28, 2024 and sell it today you would lose (0.27) from holding EGRNF or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EGRNF vs. China Overseas Land
Performance |
| Timeline |
| EGRNF |
| China Overseas Land |
EGRNF and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EGRNF and China Overseas
The main advantage of trading using opposite EGRNF and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGRNF position performs unexpectedly, China Overseas 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 China Overseas will offset losses from the drop in China Overseas' long position.| EGRNF vs. Hong Kong Land | EGRNF vs. Wharf Holdings | EGRNF vs. Holiday Island Holdings | EGRNF vs. Sun Hung Kai |
| China Overseas vs. Longfor Group Holdings | China Overseas vs. Sun Hung Kai | China Overseas vs. Country Garden Holdings | China Overseas vs. Sino Land Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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