Correlation Between Sino Land and Longfor Properties
Can any of the company-specific risk be diversified away by investing in both Sino Land and Longfor Properties 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 Longfor Properties 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 Longfor Properties Co, you can compare the effects of market volatilities on Sino Land and Longfor Properties 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 Longfor Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Land and Longfor Properties.
Diversification Opportunities for Sino Land and Longfor Properties
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sino and Longfor is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sino Land Co and Longfor Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Properties 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 Longfor Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Properties has no effect on the direction of Sino Land i.e., Sino Land and Longfor Properties go up and down completely randomly.
Pair Corralation between Sino Land and Longfor Properties
Assuming the 90 days horizon Sino Land Co is expected to generate 0.72 times more return on investment than Longfor Properties. However, Sino Land Co is 1.39 times less risky than Longfor Properties. It trades about 0.01 of its potential returns per unit of risk. Longfor Properties Co is currently generating about -0.02 per unit of risk. If you would invest 582.00 in Sino Land Co on October 21, 2024 and sell it today you would lose (93.00) from holding Sino Land Co or give up 15.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.77% |
| Values | Daily Returns |
Sino Land Co vs. Longfor Properties Co
Performance |
| Timeline |
| Sino Land |
| Longfor Properties |
Sino Land and Longfor Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino Land and Longfor Properties
The main advantage of trading using opposite Sino Land and Longfor Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino Land position performs unexpectedly, Longfor Properties 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 Longfor Properties will offset losses from the drop in Longfor Properties' 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 |
| Longfor Properties vs. Sun Hung Kai | Longfor Properties vs. Country Garden Holdings | Longfor Properties vs. Sino Land Co | Longfor Properties 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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