Correlation Between Longfor Group and Wharf Holdings
Can any of the company-specific risk be diversified away by investing in both Longfor Group 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 Group 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 Group Holdings and Wharf Holdings, you can compare the effects of market volatilities on Longfor Group 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 Group with a short position of Wharf Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longfor Group and Wharf Holdings.
Diversification Opportunities for Longfor Group and Wharf Holdings
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Longfor and Wharf is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Longfor Group Holdings and Wharf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf Holdings 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 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 Group i.e., Longfor Group and Wharf Holdings go up and down completely randomly.
Pair Corralation between Longfor Group and Wharf Holdings
Assuming the 90 days horizon Longfor Group Holdings is expected to generate 1.54 times more return on investment than Wharf Holdings. However, Longfor Group is 1.54 times more volatile than Wharf Holdings. It trades about 0.06 of its potential returns per unit of risk. Wharf Holdings is currently generating about -0.04 per unit of risk. If you would invest 126.00 in Longfor Group Holdings on September 3, 2024 and sell it today you would earn a total of 45.00 from holding Longfor Group Holdings or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
Longfor Group Holdings vs. Wharf Holdings
Performance |
| Timeline |
| Longfor Group Holdings |
| Wharf Holdings |
Longfor Group and Wharf Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longfor Group and Wharf Holdings
The main advantage of trading using opposite Longfor Group and Wharf Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longfor Group 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 Group vs. China Overseas Land | Longfor Group vs. Sun Hung Kai | Longfor Group vs. Country Garden Holdings |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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