Correlation Between Longfor Properties and EGRNF
Can any of the company-specific risk be diversified away by investing in both Longfor Properties and EGRNF 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 EGRNF 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 EGRNF, you can compare the effects of market volatilities on Longfor Properties and EGRNF 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 EGRNF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longfor Properties and EGRNF.
Diversification Opportunities for Longfor Properties and EGRNF
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Longfor and EGRNF is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Longfor Properties Co and EGRNF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGRNF 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 EGRNF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGRNF has no effect on the direction of Longfor Properties i.e., Longfor Properties and EGRNF go up and down completely randomly.
Pair Corralation between Longfor Properties and EGRNF
Assuming the 90 days horizon Longfor Properties Co is expected to under-perform the EGRNF. But the pink sheet apears to be less risky and, when comparing its historical volatility, Longfor Properties Co is 30.67 times less risky than EGRNF. The pink sheet trades about -0.01 of its potential returns per unit of risk. The EGRNF is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 11.00 in EGRNF on August 28, 2024 and sell it today you would lose (10.97) from holding EGRNF or give up 99.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longfor Properties Co vs. EGRNF
Performance |
| Timeline |
| Longfor Properties |
| EGRNF |
Longfor Properties and EGRNF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longfor Properties and EGRNF
The main advantage of trading using opposite Longfor Properties and EGRNF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longfor Properties position performs unexpectedly, EGRNF 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 EGRNF will offset losses from the drop in EGRNF'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 |
| EGRNF vs. Hong Kong Land | EGRNF vs. Wharf Holdings | EGRNF vs. Holiday Island Holdings | EGRNF vs. Sun Hung Kai |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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