Correlation Between Hong Kong and Country Garden
Can any of the company-specific risk be diversified away by investing in both Hong Kong 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 Hong Kong and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Land and Country Garden Holdings, you can compare the effects of market volatilities on Hong Kong 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 Hong Kong with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Country Garden.
Diversification Opportunities for Hong Kong and Country Garden
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hong and Country is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land 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 Hong Kong 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 Hong Kong Land 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 Hong Kong i.e., Hong Kong and Country Garden go up and down completely randomly.
Pair Corralation between Hong Kong and Country Garden
Assuming the 90 days horizon Hong Kong is expected to generate 56.2 times less return on investment than Country Garden. But when comparing it to its historical volatility, Hong Kong Land is 11.85 times less risky than Country Garden. It trades about 0.01 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 |
Hong Kong Land vs. Country Garden Holdings
Performance |
| Timeline |
| Hong Kong Land |
| Country Garden Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Hong Kong and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Country Garden
The main advantage of trading using opposite Hong Kong and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong 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.| Hong Kong vs. Wharf Holdings | Hong Kong vs. Holiday Island Holdings | Hong Kong vs. Sun Hung Kai | Hong Kong vs. Bayport International Holdings |
| Country Garden vs. Western Acquisition Ventures | Country Garden vs. Perella Weinberg Partners | Country Garden vs. Tradeweb Markets | Country Garden vs. Norfolk Southern |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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