Correlation Between Xinyuan Real and Landsea Homes
Can any of the company-specific risk be diversified away by investing in both Xinyuan Real and Landsea Homes 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 Xinyuan Real and Landsea Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinyuan Real Estate and Landsea Homes Corp, you can compare the effects of market volatilities on Xinyuan Real and Landsea Homes 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 Xinyuan Real with a short position of Landsea Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinyuan Real and Landsea Homes.
Diversification Opportunities for Xinyuan Real and Landsea Homes
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xinyuan and Landsea is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Xinyuan Real Estate and Landsea Homes Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landsea Homes Corp and Xinyuan Real 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 Xinyuan Real Estate are associated (or correlated) with Landsea Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landsea Homes Corp has no effect on the direction of Xinyuan Real i.e., Xinyuan Real and Landsea Homes go up and down completely randomly.
Pair Corralation between Xinyuan Real and Landsea Homes
Considering the 90-day investment horizon Xinyuan Real Estate is expected to under-perform the Landsea Homes. But the stock apears to be less risky and, when comparing its historical volatility, Xinyuan Real Estate is 1.39 times less risky than Landsea Homes. The stock trades about -0.18 of its potential returns per unit of risk. The Landsea Homes Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,106 in Landsea Homes Corp on August 26, 2024 and sell it today you would lose (13.00) from holding Landsea Homes Corp or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xinyuan Real Estate vs. Landsea Homes Corp
Performance |
| Timeline |
| Xinyuan Real Estate |
| Landsea Homes Corp |
Xinyuan Real and Landsea Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinyuan Real and Landsea Homes
The main advantage of trading using opposite Xinyuan Real and Landsea Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinyuan Real position performs unexpectedly, Landsea Homes 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 Landsea Homes will offset losses from the drop in Landsea Homes' long position.| Xinyuan Real vs. AMREP | Xinyuan Real vs. Alset Ehome International | Xinyuan Real vs. Landsea Homes Corp | Xinyuan Real vs. Bayport International Holdings |
| Landsea Homes vs. GCM Grosvenor | Landsea Homes vs. AerSale Corp | Landsea Homes vs. Arko Corp | Landsea Homes vs. Advantage Solutions |
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 Correlations module to find global opportunities by holding instruments from different markets.
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