Correlation Between Country Garden and Longfor Properties
Can any of the company-specific risk be diversified away by investing in both Country Garden 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 Country Garden and Longfor Properties 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 Longfor Properties Co, you can compare the effects of market volatilities on Country Garden 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 Country Garden with a short position of Longfor Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Garden and Longfor Properties.
Diversification Opportunities for Country Garden and Longfor Properties
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Country and Longfor is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Longfor Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Properties 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 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 Country Garden i.e., Country Garden and Longfor Properties go up and down completely randomly.
Pair Corralation between Country Garden and Longfor Properties
Assuming the 90 days horizon Country Garden Holdings is expected to generate 5.14 times more return on investment than Longfor Properties. However, Country Garden is 5.14 times more volatile than Longfor Properties Co. It trades about 0.09 of its potential returns per unit of risk. Longfor Properties Co is currently generating about 0.01 per unit of risk. If you would invest 9.00 in Country Garden Holdings on January 17, 2024 and sell it today you would earn a total of 1.00 from holding Country Garden Holdings or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Country Garden Holdings vs. Longfor Properties Co
Performance |
| Timeline |
| Country Garden Holdings |
| Longfor Properties |
Country Garden and Longfor Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Country Garden and Longfor Properties
The main advantage of trading using opposite Country Garden and Longfor Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Garden 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.| Country Garden vs. Haier Smart Home | Country Garden vs. Juniata Valley Financial | Country Garden vs. Artisan Partners Asset | Country Garden vs. LGI Homes |
| Longfor Properties vs. Sun Hung Kai | Longfor Properties vs. Country Garden Holdings | Longfor Properties vs. Country Garden Holdings | Longfor Properties vs. Sino Land Co |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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