Correlation Between CK Asset and Lend Lease

Can any of the company-specific risk be diversified away by investing in both CK Asset and Lend Lease 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 CK Asset and Lend Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CK Asset Holdings and Lend Lease Group, you can compare the effects of market volatilities on CK Asset and Lend Lease 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 CK Asset with a short position of Lend Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Asset and Lend Lease.

Diversification Opportunities for CK Asset and Lend Lease

0.09

Correlation Coefficient

CK Asset  Lend Lease

Significant diversification

The 3 months correlation between CHKGF and Lend is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CK Asset Holdings and Lend Lease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lend Lease Group and CK Asset 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 CK Asset Holdings are associated (or correlated) with Lend Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lend Lease Group has no effect on the direction of CK Asset i.e., CK Asset and Lend Lease go up and down completely randomly.

Pair Corralation between CK Asset and Lend Lease

Assuming the 90 days horizon CK Asset is expected to generate 1.32 times less return on investment than Lend Lease. But when comparing it to its historical volatility, CK Asset Holdings is 1.51 times less risky than Lend Lease. It trades about 0.01 of its potential returns per unit of risk. Lend Lease Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  399.00  in Lend Lease Group on February 28, 2024 and sell it today you would lose (5.00) from holding Lend Lease Group or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CK Asset Holdings  vs.  Lend Lease Group

CK Asset Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CK Asset Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CK Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lend Lease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lend Lease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lend Lease is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CK Asset and Lend Lease

The main advantage of trading using opposite CK Asset and Lend Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK Asset position performs unexpectedly, Lend Lease 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 Lend Lease will offset losses from the drop in Lend Lease's long position.

The idea behind CK Asset Holdings and Lend Lease Group 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.