Correlation Between New World and Henderson Land
Can any of the company-specific risk be diversified away by investing in both New World and Henderson Land 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 Henderson Land 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 Henderson Land Development, you can compare the effects of market volatilities on New World and Henderson Land 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 Henderson Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Henderson Land.
Diversification Opportunities for New World and Henderson Land
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Henderson is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding New World Development and Henderson Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Land Devel 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 Henderson Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Land Devel has no effect on the direction of New World i.e., New World and Henderson Land go up and down completely randomly.
Pair Corralation between New World and Henderson Land
Assuming the 90 days horizon New World Development is expected to under-perform the Henderson Land. In addition to that, New World is 4.07 times more volatile than Henderson Land Development. It trades about -0.18 of its total potential returns per unit of risk. Henderson Land Development is currently generating about -0.17 per unit of volatility. If you would invest 326.00 in Henderson Land Development on August 29, 2024 and sell it today you would lose (19.00) from holding Henderson Land Development or give up 5.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Development vs. Henderson Land Development
Performance |
| Timeline |
| New World Development |
| Henderson Land Devel |
New World and Henderson Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Henderson Land
The main advantage of trading using opposite New World and Henderson Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Henderson Land 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 Henderson Land will offset losses from the drop in Henderson Land'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 |
| Henderson Land vs. Hang Lung Properties | Henderson Land vs. Sun Hung Kai | Henderson Land vs. Hong Kong and | Henderson Land vs. New World Development |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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