Correlation Between TIMES CHINA and LANDSEA HOMES

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

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

Diversification Opportunities for TIMES CHINA and LANDSEA HOMES

-0.31

Correlation Coefficient

TIMES CHINA  LANDSEA HOMES

Very good diversification

The 3 months correlation between TIMES and LANDSEA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding TIMES CHINA HLDGS and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P and TIMES CHINA 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 TIMES CHINA HLDGS are associated (or correlated) with LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of TIMES CHINA i.e., TIMES CHINA and LANDSEA HOMES go up and down completely randomly.

Pair Corralation between TIMES CHINA and LANDSEA HOMES

Assuming the 90 days horizon TIMES CHINA HLDGS is expected to generate 6.21 times more return on investment than LANDSEA HOMES. However, TIMES CHINA is 6.21 times more volatile than LANDSEA HOMES P. It trades about 0.19 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about -0.16 per unit of risk. 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

TIMES CHINA HLDGS  vs.  LANDSEA HOMES P

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.

LANDSEA HOMES P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANDSEA HOMES P 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.

Pair Trading with TIMES CHINA and LANDSEA HOMES

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

The idea behind TIMES CHINA HLDGS and LANDSEA HOMES P 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..