Correlation Between GuocoLand and Citycon Oyj

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

By analyzing existing cross correlation between GuocoLand Limited and Citycon Oyj, you can compare the effects of market volatilities on GuocoLand and Citycon Oyj 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 GuocoLand with a short position of Citycon Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of GuocoLand and Citycon Oyj.

Diversification Opportunities for GuocoLand and Citycon Oyj

-0.74

Correlation Coefficient

GuocoLand  Citycon Oyj

Pay attention - limited upside

The 3 months correlation between GuocoLand and Citycon is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding GuocoLand Limited and Citycon Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citycon Oyj and GuocoLand 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 GuocoLand Limited are associated (or correlated) with Citycon Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citycon Oyj has no effect on the direction of GuocoLand i.e., GuocoLand and Citycon Oyj go up and down completely randomly.

Pair Corralation between GuocoLand and Citycon Oyj

Assuming the 90 days trading horizon GuocoLand Limited is expected to generate 0.39 times more return on investment than Citycon Oyj. However, GuocoLand Limited is 2.54 times less risky than Citycon Oyj. It trades about 0.13 of its potential returns per unit of risk. Citycon Oyj is currently generating about -0.19 per unit of risk. If you would invest  99.00  in GuocoLand Limited on September 23, 2024 and sell it today you would earn a total of  6.00  from holding GuocoLand Limited or generate 6.06% return on investment over 90 days.

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

GuocoLand Limited  vs.  Citycon Oyj

GuocoLand Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GuocoLand is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Citycon Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citycon Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GuocoLand and Citycon Oyj

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

The idea behind GuocoLand Limited and Citycon Oyj 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.