Correlation Between Gaucho Group and New World
Can any of the company-specific risk be diversified away by investing in both Gaucho Group and New World 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 Gaucho Group and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaucho Group Holdings and New World Development, you can compare the effects of market volatilities on Gaucho Group and New World 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 Gaucho Group with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaucho Group and New World.
Diversification Opportunities for Gaucho Group and New World
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gaucho and New is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gaucho Group Holdings and New World Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Development and Gaucho Group 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 Gaucho Group Holdings are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Development has no effect on the direction of Gaucho Group i.e., Gaucho Group and New World go up and down completely randomly.
Pair Corralation between Gaucho Group and New World
Given the investment horizon of 90 days Gaucho Group Holdings is expected to under-perform the New World. In addition to that, Gaucho Group is 2.68 times more volatile than New World Development. It trades about -0.22 of its total potential returns per unit of risk. New World Development is currently generating about -0.16 per unit of volatility. If you would invest 53.00 in New World Development on August 24, 2024 and sell it today you would lose (12.00) from holding New World Development or give up 22.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gaucho Group Holdings vs. New World Development
Performance |
| Timeline |
| Gaucho Group Holdings |
| New World Development |
Gaucho Group and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaucho Group and New World
The main advantage of trading using opposite Gaucho Group and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaucho Group position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.The idea behind Gaucho Group Holdings and New World Development pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| New World vs. Henderson Land Development | New World vs. Sun Hung Kai | New World vs. Hang Lung Properties | New World vs. Swire Pacific |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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