Correlation Between Canlan Ice and Country Garden

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

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

Diversification Opportunities for Canlan Ice and Country Garden

0.33

Correlation Coefficient

Canlan Ice  Country Garden

Weak diversification

The 3 months correlation between Canlan and Country is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports 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 Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and Country Garden go up and down completely randomly.

Pair Corralation between Canlan Ice and Country Garden

Assuming the 90 days horizon Canlan Ice is expected to generate 216.74 times less return on investment than Country Garden. But when comparing it to its historical volatility, Canlan Ice Sports is 294.57 times less risky than Country Garden. It trades about 0.17 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Country Garden Holdings on September 17, 2024 and sell it today you would earn a total of  5.00  from holding Country Garden Holdings or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Canlan Ice Sports  vs.  Country Garden Holdings

Canlan Ice Sports

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Country Garden Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Country Garden Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Country Garden reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canlan Ice and Country Garden

The main advantage of trading using opposite Canlan Ice and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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 Canlan Ice Sports 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.