Correlation Between New World and G City
Can any of the company-specific risk be diversified away by investing in both New World and G City 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 New World and G City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Development and G City, you can compare the effects of market volatilities on New World and G City 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 New World with a short position of G City. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and G City.
Diversification Opportunities for New World and G City
Good diversification
The 3 months correlation between New and GZTGF is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding New World Development and G City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G City and New World 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 New World Development are associated (or correlated) with G City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G City has no effect on the direction of New World i.e., New World and G City go up and down completely randomly.
Pair Corralation between New World and G City
Assuming the 90 days horizon New World Development is expected to under-perform the G City. But the pink sheet apears to be less risky and, when comparing its historical volatility, New World Development is 1.07 times less risky than G City. The pink sheet trades about -0.01 of its potential returns per unit of risk. The G City is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 401.00 in G City on September 2, 2024 and sell it today you would lose (26.00) from holding G City or give up 6.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.44% |
| Values | Daily Returns |
New World Development vs. G City
Performance |
| Timeline |
| New World Development |
| G City |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
New World and G City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and G City
The main advantage of trading using opposite New World and G City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, G City 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 G City will offset losses from the drop in G City's long position.| New World vs. Henderson Land Development | New World vs. Sun Hung Kai | New World vs. Hang Lung Properties | New World vs. Swire Pacific |
| G City vs. New World Development | G City vs. Gaucho Group Holdings | G City vs. Henderson Land Development | G City vs. Creative Media Community |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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