Correlation Between CBRE Group and Hang Lung
Can any of the company-specific risk be diversified away by investing in both CBRE Group and Hang Lung 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 CBRE Group and Hang Lung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBRE Group Class and Hang Lung Properties, you can compare the effects of market volatilities on CBRE Group and Hang Lung 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 CBRE Group with a short position of Hang Lung. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBRE Group and Hang Lung.
Diversification Opportunities for CBRE Group and Hang Lung
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CBRE and Hang is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CBRE Group Class and Hang Lung Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Lung Properties and CBRE Group 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 CBRE Group Class are associated (or correlated) with Hang Lung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Lung Properties has no effect on the direction of CBRE Group i.e., CBRE Group and Hang Lung go up and down completely randomly.
Pair Corralation between CBRE Group and Hang Lung
Given the investment horizon of 90 days CBRE Group Class is expected to under-perform the Hang Lung. In addition to that, CBRE Group is 1.04 times more volatile than Hang Lung Properties. It trades about -0.3 of its total potential returns per unit of risk. Hang Lung Properties is currently generating about 0.18 per unit of volatility. If you would invest 516.00 in Hang Lung Properties on January 26, 2024 and sell it today you would earn a total of 28.00 from holding Hang Lung Properties or generate 5.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CBRE Group Class vs. Hang Lung Properties
Performance |
Timeline |
CBRE Group Class |
Hang Lung Properties |
CBRE Group and Hang Lung Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CBRE Group and Hang Lung
The main advantage of trading using opposite CBRE Group and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBRE Group position performs unexpectedly, Hang Lung 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 Hang Lung will offset losses from the drop in Hang Lung's long position.The idea behind CBRE Group Class and Hang Lung Properties 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.Hang Lung vs. IRSA Inversiones Y | Hang Lung vs. Anywhere Real Estate | Hang Lung vs. Newmark Group | Hang Lung vs. New York City |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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