Correlation Between Gateway Real and TIMES CHINA

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

By analyzing existing cross correlation between Gateway Real Estate and TIMES CHINA HLDGS, you can compare the effects of market volatilities on Gateway Real and TIMES 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 Gateway Real with a short position of TIMES CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gateway Real and TIMES CHINA.

Diversification Opportunities for Gateway Real and TIMES CHINA

-0.09

Correlation Coefficient

Gateway Real  TIMES CHINA

Good diversification

The 3 months correlation between Gateway and TIMES is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Real Estate and TIMES CHINA HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIMES CHINA HLDGS and Gateway Real 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 Gateway Real Estate are associated (or correlated) with TIMES CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIMES CHINA HLDGS has no effect on the direction of Gateway Real i.e., Gateway Real and TIMES CHINA go up and down completely randomly.

Pair Corralation between Gateway Real and TIMES CHINA

Assuming the 90 days horizon Gateway Real Estate is expected to under-perform the TIMES CHINA. But the stock apears to be less risky and, when comparing its historical volatility, Gateway Real Estate is 2.97 times less risky than TIMES CHINA. The stock trades about -0.15 of its potential returns per unit of risk. The TIMES CHINA HLDGS is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.95  in TIMES CHINA HLDGS on September 23, 2024 and sell it today you would earn a total of  2.65  from holding TIMES CHINA HLDGS or generate 278.95% return on investment over 90 days.

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

Gateway Real Estate  vs.  TIMES CHINA HLDGS

Gateway Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gateway Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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.

TIMES CHINA HLDGS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TIMES CHINA HLDGS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, TIMES CHINA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gateway Real and TIMES CHINA

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

The idea behind Gateway Real Estate and TIMES CHINA HLDGS 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 Stocks Directory module to find actively traded stocks across global markets.