Correlation Between Country Garden and Mitsubishi Estate
Can any of the company-specific risk be diversified away by investing in both Country Garden and Mitsubishi Estate 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 Mitsubishi Estate 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 Mitsubishi Estate Co, you can compare the effects of market volatilities on Country Garden and Mitsubishi Estate 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 Mitsubishi Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Garden and Mitsubishi Estate.
Diversification Opportunities for Country Garden and Mitsubishi Estate
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Country and Mitsubishi is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Mitsubishi Estate Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Estate 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 Mitsubishi Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Estate has no effect on the direction of Country Garden i.e., Country Garden and Mitsubishi Estate go up and down completely randomly.
Pair Corralation between Country Garden and Mitsubishi Estate
Assuming the 90 days horizon Country Garden Holdings is expected to generate 11.77 times more return on investment than Mitsubishi Estate. However, Country Garden is 11.77 times more volatile than Mitsubishi Estate Co. It trades about 0.12 of its potential returns per unit of risk. Mitsubishi Estate Co is currently generating about 0.04 per unit of risk. If you would invest 7.00 in Country Garden Holdings on January 26, 2024 and sell it today you would earn a total of 1.00 from holding Country Garden Holdings or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Country Garden Holdings vs. Mitsubishi Estate Co
Performance |
| Timeline |
| Country Garden Holdings |
| Mitsubishi Estate |
Country Garden and Mitsubishi Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Country Garden and Mitsubishi Estate
The main advantage of trading using opposite Country Garden and Mitsubishi Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Garden position performs unexpectedly, Mitsubishi Estate 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 Mitsubishi Estate will offset losses from the drop in Mitsubishi Estate's long position.| Country Garden vs. California Water Service | Country Garden vs. Kinetik Holdings | Country Garden vs. NRG Energy | Country Garden vs. PACCAR Inc |
| Mitsubishi Estate vs. Comstock Holding Companies | Mitsubishi Estate vs. St Joe Company | Mitsubishi Estate vs. Stratus Properties |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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