Correlation Between Holiday Island and Country Garden
Can any of the company-specific risk be diversified away by investing in both Holiday Island 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 Holiday Island and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holiday Island Holdings and Country Garden Holdings, you can compare the effects of market volatilities on Holiday Island 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 Holiday Island with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Island and Country Garden.
Diversification Opportunities for Holiday Island and Country Garden
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Holiday and Country is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Island Holdings 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 Holiday Island 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 Holiday Island Holdings 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 Holiday Island i.e., Holiday Island and Country Garden go up and down completely randomly.
Pair Corralation between Holiday Island and Country Garden
Given the investment horizon of 90 days Holiday Island Holdings is expected to generate 3.75 times more return on investment than Country Garden. However, Holiday Island is 3.75 times more volatile than Country Garden Holdings. It trades about 0.07 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.02 per unit of risk. If you would invest 1.50 in Holiday Island Holdings on November 2, 2024 and sell it today you would earn a total of 1.30 from holding Holiday Island Holdings or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.88% |
| Values | Daily Returns |
Holiday Island Holdings vs. Country Garden Holdings
Performance |
| Timeline |
| Holiday Island Holdings |
| Country Garden Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Holiday Island and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Island and Country Garden
The main advantage of trading using opposite Holiday Island and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Island 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.| Holiday Island vs. Hong Kong Land | Holiday Island vs. Wharf Holdings | Holiday Island vs. Sun Hung Kai | Holiday Island vs. Bayport International Holdings |
| Country Garden vs. Longfor Properties Co | Country Garden vs. China Overseas Land | Country Garden vs. China Resources Land | Country Garden vs. Anhui Conch Cement |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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