Correlation Between Boeing and Country Garden

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

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

Diversification Opportunities for Boeing and Country Garden

-0.34

Correlation Coefficient

Boeing  Country Garden

Very good diversification

The 3 months correlation between Boeing and Country is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing 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 Boeing 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 The Boeing 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 Boeing i.e., Boeing and Country Garden go up and down completely randomly.

Pair Corralation between Boeing and Country Garden

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Country Garden. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 7.32 times less risky than Country Garden. The stock trades about -0.03 of its potential returns per unit of risk. The Country Garden Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  149.00  in Country Garden Holdings on September 5, 2024 and sell it today you would earn a total of  226.00  from holding Country Garden Holdings or generate 151.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

The Boeing  vs.  Country Garden Holdings

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Country Garden Holdings

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Country Garden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Country Garden showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and Country Garden

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

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.