Correlation Between Longfor Properties and Country Garden
Can any of the company-specific risk be diversified away by investing in both Longfor Properties 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 Longfor Properties and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longfor Properties Co and Country Garden Holdings, you can compare the effects of market volatilities on Longfor Properties 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 Longfor Properties with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longfor Properties and Country Garden.
Diversification Opportunities for Longfor Properties and Country Garden
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Longfor and Country is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Longfor Properties Co 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 Longfor Properties 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 Longfor Properties Co 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 Longfor Properties i.e., Longfor Properties and Country Garden go up and down completely randomly.
Pair Corralation between Longfor Properties and Country Garden
Assuming the 90 days horizon Longfor Properties is expected to generate 3.59 times less return on investment than Country Garden. But when comparing it to its historical volatility, Longfor Properties Co is 1.74 times less risky than Country Garden. It trades about 0.08 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 149.00 in Country Garden Holdings on August 28, 2024 and sell it today you would earn a total of 226.00 from holding Country Garden Holdings or generate 151.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Longfor Properties Co vs. Country Garden Holdings
Performance |
| Timeline |
| Longfor Properties |
| Country Garden Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Longfor Properties and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longfor Properties and Country Garden
The main advantage of trading using opposite Longfor Properties and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longfor Properties 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.| Longfor Properties vs. Sun Hung Kai | Longfor Properties vs. Country Garden Holdings | Longfor Properties vs. Sino Land Co | Longfor Properties vs. Sun Hung Kai |
| Country Garden vs. Longfor Properties Co | Country Garden vs. China Overseas Land | Country Garden vs. Country Garden Holdings | 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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