Correlation Between Sino Land and China Resources
Can any of the company-specific risk be diversified away by investing in both Sino Land and China Resources 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 Sino Land and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino Land Co and China Resources Land, you can compare the effects of market volatilities on Sino Land and China Resources 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 Sino Land with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Land and China Resources.
Diversification Opportunities for Sino Land and China Resources
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sino and China is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sino Land Co and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land and Sino Land 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 Sino Land Co are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Land has no effect on the direction of Sino Land i.e., Sino Land and China Resources go up and down completely randomly.
Pair Corralation between Sino Land and China Resources
Assuming the 90 days horizon Sino Land Co is expected to under-perform the China Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sino Land Co is 6.41 times less risky than China Resources. The pink sheet trades about 0.0 of its potential returns per unit of risk. The China Resources Land is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 418.00 in China Resources Land on August 28, 2024 and sell it today you would lose (75.00) from holding China Resources Land or give up 17.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 45.05% |
| Values | Daily Returns |
Sino Land Co vs. China Resources Land
Performance |
| Timeline |
| Sino Land |
| China Resources Land |
Sino Land and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino Land and China Resources
The main advantage of trading using opposite Sino Land and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino Land position performs unexpectedly, China Resources 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 Resources will offset losses from the drop in China Resources' long position.| Sino Land vs. Wharf Holdings | Sino Land vs. Hong Kong Land | Sino Land vs. Sun Hung Kai | Sino Land vs. Country Garden Holdings |
| China Resources vs. Sun Hung Kai | China Resources vs. China Overseas Land | China Resources vs. EGRNF | China Resources vs. Sino Land Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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