Correlation Between Land and Grand Canal
Can any of the company-specific risk be diversified away by investing in both Land and Grand Canal 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 Land and Grand Canal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Land and Houses and Grand Canal Land, you can compare the effects of market volatilities on Land and Grand Canal 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 Land with a short position of Grand Canal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Land and Grand Canal.
Diversification Opportunities for Land and Grand Canal
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Land and Grand is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and Grand Canal Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canal Land and Land 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 Land and Houses are associated (or correlated) with Grand Canal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canal Land has no effect on the direction of Land i.e., Land and Grand Canal go up and down completely randomly.
Pair Corralation between Land and Grand Canal
Assuming the 90 days horizon Land and Houses is expected to under-perform the Grand Canal. But the stock apears to be less risky and, when comparing its historical volatility, Land and Houses is 39.05 times less risky than Grand Canal. The stock trades about -0.1 of its potential returns per unit of risk. The Grand Canal Land is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 164.00 in Grand Canal Land on November 4, 2024 and sell it today you would lose (42.00) from holding Grand Canal Land or give up 25.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.58% |
| Values | Daily Returns |
Land and Houses vs. Grand Canal Land
Performance |
| Timeline |
| Land and Houses |
| Grand Canal Land |
Land and Grand Canal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Land and Grand Canal
The main advantage of trading using opposite Land and Grand Canal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Land position performs unexpectedly, Grand Canal 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 Grand Canal will offset losses from the drop in Grand Canal's long position.The idea behind Land and Houses and Grand Canal Land pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Grand Canal vs. Bangkok Land Public | Grand Canal vs. Country Group Development | Grand Canal vs. Eastern Star Real | Grand Canal vs. Amata Public |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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