Correlation Between Roku and Country Garden

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Can any of the company-specific risk be diversified away by investing in both Roku and Country Garden 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 Roku and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roku Inc and Country Garden Holdings, you can compare the effects of market volatilities on Roku and Country Garden 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 Roku with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roku and Country Garden.

Diversification Opportunities for Roku and Country Garden

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Roku and Country is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings and Roku 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 Roku Inc are associated (or correlated) with Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of Roku i.e., Roku and Country Garden go up and down completely randomly.

Pair Corralation between Roku and Country Garden

Given the investment horizon of 90 days Roku Inc is expected to generate 0.15 times more return on investment than Country Garden. However, Roku Inc is 6.48 times less risky than Country Garden. It trades about 0.13 of its potential returns per unit of risk. Country Garden Holdings is currently generating about -0.22 per unit of risk. If you would invest  6,383  in Roku Inc on December 29, 2023 and sell it today you would earn a total of  175.00  from holding Roku Inc or generate 2.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Roku Inc  vs.  Country Garden Holdings

 Performance 
       Timeline  
Roku Inc 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Roku Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in April 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Country Garden Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Country Garden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Roku and Country Garden Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Roku and Country Garden

The main advantage of trading using opposite Roku and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roku position performs unexpectedly, Country Garden 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 Country Garden will offset losses from the drop in Country Garden's long position.
The idea behind Roku Inc and Country Garden Holdings 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.
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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