Correlation Between Country Garden and Harbor Custom

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

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

Diversification Opportunities for Country Garden and Harbor Custom

0.32

Correlation Coefficient

Country Garden  Harbor Custom

Weak diversification

The 3 months correlation between Country and Harbor is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Harbor Custom Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Custom Development 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 Holdings are associated (or correlated) with Harbor Custom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Custom Development has no effect on the direction of Country Garden i.e., Country Garden and Harbor Custom go up and down completely randomly.

Pair Corralation between Country Garden and Harbor Custom

If you would invest  20.00  in Country Garden Holdings on September 15, 2024 and sell it today you would lose (2.00) from holding Country Garden Holdings or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Country Garden Holdings  vs.  Harbor Custom Development

Country Garden Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Country Garden Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Country Garden reported solid returns over the last few months and may actually be approaching a breakup point.

Harbor Custom Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbor Custom Development has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Harbor Custom is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Country Garden and Harbor Custom

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

The idea behind Country Garden Holdings and Harbor Custom Development 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.