Correlation Between TIMES CHINA and Greenland Hong

Can any of the company-specific risk be diversified away by investing in both TIMES CHINA and Greenland Hong 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 Greenland Hong 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 Greenland Hong Kong, you can compare the effects of market volatilities on TIMES CHINA and Greenland Hong 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 Greenland Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIMES CHINA and Greenland Hong.

Diversification Opportunities for TIMES CHINA and Greenland Hong

0.71

Correlation Coefficient

TIMES CHINA  Greenland Hong

Poor diversification

The 3 months correlation between TIMES and Greenland is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TIMES CHINA HLDGS and Greenland Hong Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenland Hong Kong 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 Greenland Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenland Hong Kong has no effect on the direction of TIMES CHINA i.e., TIMES CHINA and Greenland Hong go up and down completely randomly.

Pair Corralation between TIMES CHINA and Greenland Hong

Assuming the 90 days horizon TIMES CHINA is expected to generate 1.37 times less return on investment than Greenland Hong. But when comparing it to its historical volatility, TIMES CHINA HLDGS is 1.62 times less risky than Greenland Hong. It trades about 0.19 of its potential returns per unit of risk. Greenland Hong Kong is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.65  in Greenland Hong Kong on September 23, 2024 and sell it today you would earn a total of  2.50  from holding Greenland Hong Kong or generate 384.62% return on investment over 90 days.

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

TIMES CHINA HLDGS  vs.  Greenland Hong Kong

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.

Greenland Hong Kong

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greenland Hong Kong are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Greenland Hong reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TIMES CHINA and Greenland Hong

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

The idea behind TIMES CHINA HLDGS and Greenland Hong Kong 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.