Correlation Between Roku and Country Garden
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Roku Inc vs. Country Garden Holdings
Performance |
Timeline |
Roku Inc |
Country Garden Holdings |
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.Country Garden vs. BRP Inc | Country Garden vs. AKITA Drilling | Country Garden vs. Marine Products | Country Garden vs. Visteon 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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