Correlation Between GREENLIGHT CAP and China Resources

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

By analyzing existing cross correlation between GREENLIGHT CAP RE and China Resources Land, you can compare the effects of market volatilities on GREENLIGHT CAP and China Resources 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 GREENLIGHT CAP with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENLIGHT CAP and China Resources.

Diversification Opportunities for GREENLIGHT CAP and China Resources

-0.34

Correlation Coefficient

GREENLIGHT CAP  China Resources

Very good diversification

The 3 months correlation between GREENLIGHT and China is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding GREENLIGHT CAP RE and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land and GREENLIGHT CAP 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 GREENLIGHT CAP RE are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Land has no effect on the direction of GREENLIGHT CAP i.e., GREENLIGHT CAP and China Resources go up and down completely randomly.

Pair Corralation between GREENLIGHT CAP and China Resources

Assuming the 90 days trading horizon GREENLIGHT CAP RE is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, GREENLIGHT CAP RE is 2.31 times less risky than China Resources. The stock trades about -0.3 of its potential returns per unit of risk. The China Resources Land is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  272.00  in China Resources Land on September 23, 2024 and sell it today you would lose (2.00) from holding China Resources Land or give up 0.74% of portfolio value over 90 days.

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

GREENLIGHT CAP RE  vs.  China Resources Land

GREENLIGHT CAP RE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GREENLIGHT CAP RE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, GREENLIGHT CAP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

China Resources Land

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Land are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GREENLIGHT CAP and China Resources

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

The idea behind GREENLIGHT CAP RE and China Resources Land 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 Valuation module to check real value of public entities based on technical and fundamental data.