Correlation Between Brookfield Property and Country Garden

Can any of the company-specific risk be diversified away by investing in both Brookfield Property 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 Brookfield Property and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brookfield Property Partners and Country Garden Services, you can compare the effects of market volatilities on Brookfield Property 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 Brookfield Property with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Property and Country Garden.

Diversification Opportunities for Brookfield Property and Country Garden

-0.14

Correlation Coefficient

Brookfield Property  Country Garden

Good diversification

The 3 months correlation between Brookfield and Country is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Property Partners and Country Garden Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Services and Brookfield Property 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 Brookfield Property Partners 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 Services has no effect on the direction of Brookfield Property i.e., Brookfield Property and Country Garden go up and down completely randomly.

Pair Corralation between Brookfield Property and Country Garden

Assuming the 90 days horizon Brookfield Property Partners is expected to generate 0.42 times more return on investment than Country Garden. However, Brookfield Property Partners is 2.39 times less risky than Country Garden. It trades about 0.04 of its potential returns per unit of risk. Country Garden Services is currently generating about -0.03 per unit of risk. If you would invest  1,340  in Brookfield Property Partners on January 24, 2024 and sell it today you would earn a total of  115.00  from holding Brookfield Property Partners or generate 8.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brookfield Property Partners  vs.  Country Garden Services

Brookfield Property

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Property Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Brookfield Property may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Country Garden Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Garden Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Brookfield Property and Country Garden

The main advantage of trading using opposite Brookfield Property and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Property 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 Brookfield Property Partners and Country Garden Services 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.

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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..