Correlation Between China Overseas and Chuangs China
Can any of the company-specific risk be diversified away by investing in both China Overseas and Chuangs China 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 China Overseas and Chuangs China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Overseas Land and Chuangs China Investments, you can compare the effects of market volatilities on China Overseas and Chuangs China 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 China Overseas with a short position of Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and Chuangs China.
Diversification Opportunities for China Overseas and Chuangs China
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Chuangs is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments and China Overseas 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 China Overseas Land are associated (or correlated) with Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of China Overseas i.e., China Overseas and Chuangs China go up and down completely randomly.
Pair Corralation between China Overseas and Chuangs China
Assuming the 90 days horizon China Overseas Land is expected to generate 6.88 times more return on investment than Chuangs China. However, China Overseas is 6.88 times more volatile than Chuangs China Investments. It trades about 0.14 of its potential returns per unit of risk. Chuangs China Investments is currently generating about 0.0 per unit of risk. If you would invest 103.00 in China Overseas Land on September 1, 2024 and sell it today you would earn a total of 57.00 from holding China Overseas Land or generate 55.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China Overseas Land vs. Chuangs China Investments
Performance |
Timeline |
China Overseas Land |
Chuangs China Investments |
China Overseas and Chuangs China Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Overseas and Chuangs China
The main advantage of trading using opposite China Overseas and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.China Overseas vs. Sun Hung Kai | China Overseas vs. CHINA VANKE TD | China Overseas vs. Longfor Group Holdings | China Overseas vs. Mitsui Fudosan Co |
Chuangs China vs. ADRIATIC METALS LS 013355 | Chuangs China vs. Astral Foods Limited | Chuangs China vs. LION ONE METALS | Chuangs China vs. United Natural Foods |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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