Correlation Between Country Garden and China Evergrande
Can any of the company-specific risk be diversified away by investing in both Country Garden and China Evergrande 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 Country Garden and China Evergrande into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Country Garden Holdings and China Evergrande Group, you can compare the effects of market volatilities on Country Garden and China Evergrande 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 Country Garden with a short position of China Evergrande. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Garden and China Evergrande.
Diversification Opportunities for Country Garden and China Evergrande
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Country and China is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and China Evergrande Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Evergrande and Country Garden 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 Country Garden Holdings are associated (or correlated) with China Evergrande. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Evergrande has no effect on the direction of Country Garden i.e., Country Garden and China Evergrande go up and down completely randomly.
Pair Corralation between Country Garden and China Evergrande
If you would invest 10.00 in Country Garden Holdings on January 25, 2024 and sell it today you would earn a total of 0.00 from holding Country Garden Holdings or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 2.38% |
Values | Daily Returns |
Country Garden Holdings vs. China Evergrande Group
Performance |
Timeline |
Country Garden Holdings |
China Evergrande |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Country Garden and China Evergrande Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Country Garden and China Evergrande
The main advantage of trading using opposite Country Garden and China Evergrande positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Garden position performs unexpectedly, China Evergrande 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 Evergrande will offset losses from the drop in China Evergrande's long position.Country Garden vs. Sino Land Co | Country Garden vs. Sun Hung Kai | Country Garden vs. Holiday Island Holdings |
China Evergrande vs. Sino Land Co | China Evergrande vs. Holiday Island Holdings | China Evergrande vs. Sun Hung Kai | China Evergrande vs. Bayport International Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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