Correlation Between Country Garden and Brookfield Property

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

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

Diversification Opportunities for Country Garden and Brookfield Property

-0.22

Correlation Coefficient

Country Garden  Brookfield Property

Very good diversification

The 3 months correlation between Country and Brookfield is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Services and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property 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 Services are associated (or correlated) with Brookfield Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Property has no effect on the direction of Country Garden i.e., Country Garden and Brookfield Property go up and down completely randomly.

Pair Corralation between Country Garden and Brookfield Property

Assuming the 90 days horizon Country Garden Services is expected to under-perform the Brookfield Property. In addition to that, Country Garden is 2.74 times more volatile than Brookfield Property Partners. It trades about -0.38 of its total potential returns per unit of risk. Brookfield Property Partners is currently generating about -0.01 per unit of volatility. If you would invest  1,440  in Brookfield Property Partners on January 20, 2024 and sell it today you would lose (10.00) from holding Brookfield Property Partners or give up 0.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Country Garden Services  vs.  Brookfield Property Partners

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. In spite of latest inconsistent performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Brookfield Property

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Property Partners are ranked lower than 8 (%) 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.

Pair Trading with Country Garden and Brookfield Property

The main advantage of trading using opposite Country Garden and Brookfield Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Garden position performs unexpectedly, Brookfield Property 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 Brookfield Property will offset losses from the drop in Brookfield Property's long position.

The idea behind Country Garden Services and Brookfield Property Partners 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.