Correlation Between Longfor Properties and Wharf Holdings
Can any of the company-specific risk be diversified away by investing in both Longfor Properties and Wharf Holdings 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 Wharf Holdings 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 Wharf Holdings, you can compare the effects of market volatilities on Longfor Properties and Wharf Holdings 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 Wharf Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longfor Properties and Wharf Holdings.
Diversification Opportunities for Longfor Properties and Wharf Holdings
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Longfor and Wharf is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Longfor Properties Co and Wharf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf 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 Wharf Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Holdings has no effect on the direction of Longfor Properties i.e., Longfor Properties and Wharf Holdings go up and down completely randomly.
Pair Corralation between Longfor Properties and Wharf Holdings
Assuming the 90 days horizon Longfor Properties Co is expected to under-perform the Wharf Holdings. In addition to that, Longfor Properties is 1.71 times more volatile than Wharf Holdings. It trades about -0.02 of its total potential returns per unit of risk. Wharf Holdings is currently generating about 0.02 per unit of volatility. If you would invest 513.00 in Wharf Holdings on October 21, 2024 and sell it today you would earn a total of 53.00 from holding Wharf Holdings or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.97% |
| Values | Daily Returns |
Longfor Properties Co vs. Wharf Holdings
Performance |
| Timeline |
| Longfor Properties |
| Wharf Holdings |
Longfor Properties and Wharf Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longfor Properties and Wharf Holdings
The main advantage of trading using opposite Longfor Properties and Wharf Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longfor Properties position performs unexpectedly, Wharf Holdings 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 Wharf Holdings will offset losses from the drop in Wharf Holdings' 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 |
| Wharf Holdings vs. Sino Land Co | Wharf Holdings vs. Hong Kong Land | Wharf Holdings vs. Holiday Island Holdings | Wharf Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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