Correlation Between FRASERS PROPERTY and GuocoLand

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

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

Diversification Opportunities for FRASERS PROPERTY and GuocoLand

0.85

Correlation Coefficient

FRASERS PROPERTY  GuocoLand

Very poor diversification

The 3 months correlation between FRASERS and GuocoLand is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FRASERS PROPERTY and GuocoLand Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuocoLand Limited and FRASERS PROPERTY 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 FRASERS PROPERTY are associated (or correlated) with GuocoLand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuocoLand Limited has no effect on the direction of FRASERS PROPERTY i.e., FRASERS PROPERTY and GuocoLand go up and down completely randomly.

Pair Corralation between FRASERS PROPERTY and GuocoLand

Assuming the 90 days horizon FRASERS PROPERTY is expected to generate 2.46 times more return on investment than GuocoLand. However, FRASERS PROPERTY is 2.46 times more volatile than GuocoLand Limited. It trades about 0.13 of its potential returns per unit of risk. GuocoLand Limited is currently generating about 0.2 per unit of risk. If you would invest  55.00  in FRASERS PROPERTY on September 3, 2024 and sell it today you would earn a total of  8.00  from holding FRASERS PROPERTY or generate 14.55% return on investment over 90 days.

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

FRASERS PROPERTY  vs.  GuocoLand Limited

FRASERS PROPERTY

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FRASERS PROPERTY are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FRASERS PROPERTY reported solid returns over the last few months and may actually be approaching a breakup point.

GuocoLand Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GuocoLand may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FRASERS PROPERTY and GuocoLand

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

The idea behind FRASERS PROPERTY and GuocoLand Limited 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.