Correlation Between Park Electrochemical and Country Garden
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and Country Garden 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 Park Electrochemical and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and Country Garden Holdings, you can compare the effects of market volatilities on Park Electrochemical and Country Garden 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 Park Electrochemical with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and Country Garden.
Diversification Opportunities for Park Electrochemical and Country Garden
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Park and Country is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and Country Garden go up and down completely randomly.
Pair Corralation between Park Electrochemical and Country Garden
Considering the 90-day investment horizon Park Electrochemical is expected to generate 15.65 times less return on investment than Country Garden. In addition to that, Park Electrochemical is 1.02 times more volatile than Country Garden Holdings. It trades about 0.01 of its total potential returns per unit of risk. Country Garden Holdings is currently generating about 0.22 per unit of volatility. If you would invest 17.00 in Country Garden Holdings on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Country Garden Holdings or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Electrochemical vs. Country Garden Holdings
Performance |
| Timeline |
| Park Electrochemical |
| Country Garden Holdings |
Park Electrochemical and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and Country Garden
The main advantage of trading using opposite Park Electrochemical and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, Country Garden 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 Country Garden will offset losses from the drop in Country Garden's long position.| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
| Country Garden vs. Sweetgreen | Country Garden vs. Cannae Holdings | Country Garden vs. Mativ Holdings | Country Garden vs. Luxfer Holdings PLC |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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