Correlation Between Country Garden and Megaworld Corp
Can any of the company-specific risk be diversified away by investing in both Country Garden and Megaworld Corp 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 Megaworld Corp 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 Megaworld Corp ADR, you can compare the effects of market volatilities on Country Garden and Megaworld Corp 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 Megaworld Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Garden and Megaworld Corp.
Diversification Opportunities for Country Garden and Megaworld Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Country and Megaworld is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Megaworld Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megaworld Corp ADR 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 Megaworld Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megaworld Corp ADR has no effect on the direction of Country Garden i.e., Country Garden and Megaworld Corp go up and down completely randomly.
Pair Corralation between Country Garden and Megaworld Corp
Assuming the 90 days horizon Country Garden Holdings is expected to generate 10.01 times more return on investment than Megaworld Corp. However, Country Garden is 10.01 times more volatile than Megaworld Corp ADR. It trades about 0.15 of its potential returns per unit of risk. Megaworld Corp ADR is currently generating about -0.01 per unit of risk. If you would invest 7.00 in Country Garden Holdings on January 24, 2024 and sell it today you would earn a total of 3.00 from holding Country Garden Holdings or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Country Garden Holdings vs. Megaworld Corp ADR
Performance |
| Timeline |
| Country Garden Holdings |
| Megaworld Corp ADR |
Country Garden and Megaworld Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Country Garden and Megaworld Corp
The main advantage of trading using opposite Country Garden and Megaworld Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Garden position performs unexpectedly, Megaworld Corp 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 Megaworld Corp will offset losses from the drop in Megaworld Corp's long position.| Country Garden vs. Where Food Comes | Country Garden vs. Kura Sushi USA | Country Garden vs. LuxUrban Hotels 1300 | Country Garden vs. BJs Restaurants |
| Megaworld Corp vs. BDO Unibank ADR | Megaworld Corp vs. Ayala Corp ADR | Megaworld Corp vs. Alliance Global Group | Megaworld Corp vs. Jollibee Foods Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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