Correlation Between Longfor Group and China Overseas
Can any of the company-specific risk be diversified away by investing in both Longfor Group and China Overseas 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 Group and China Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longfor Group Holdings and China Overseas Land, you can compare the effects of market volatilities on Longfor Group and China Overseas 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 Group with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longfor Group and China Overseas.
Diversification Opportunities for Longfor Group and China Overseas
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Longfor and China is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Longfor Group Holdings and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and Longfor Group 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 Group Holdings are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of Longfor Group i.e., Longfor Group and China Overseas go up and down completely randomly.
Pair Corralation between Longfor Group and China Overseas
Assuming the 90 days horizon Longfor Group Holdings is expected to generate 1.59 times more return on investment than China Overseas. However, Longfor Group is 1.59 times more volatile than China Overseas Land. It trades about 0.01 of its potential returns per unit of risk. China Overseas Land is currently generating about 0.0 per unit of risk. If you would invest 317.00 in Longfor Group Holdings on August 31, 2024 and sell it today you would lose (146.00) from holding Longfor Group Holdings or give up 46.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
Longfor Group Holdings vs. China Overseas Land
Performance |
| Timeline |
| Longfor Group Holdings |
| China Overseas Land |
Longfor Group and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longfor Group and China Overseas
The main advantage of trading using opposite Longfor Group and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longfor Group position performs unexpectedly, China Overseas 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 China Overseas will offset losses from the drop in China Overseas' long position.| Longfor Group vs. China Overseas Land | Longfor Group vs. Sun Hung Kai | Longfor Group vs. Country Garden Holdings |
| China Overseas vs. HUMANA INC | China Overseas vs. SCOR PK | China Overseas vs. Aquagold International | China Overseas vs. Thrivent High Yield |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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