Correlation Between LANDSEA HOMES and Jiangsu Expressway

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

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

Diversification Opportunities for LANDSEA HOMES and Jiangsu Expressway

-0.36

Correlation Coefficient

LANDSEA HOMES  Jiangsu Expressway

Very good diversification

The 3 months correlation between LANDSEA and Jiangsu is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding LANDSEA HOMES P and Jiangsu Expressway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and LANDSEA HOMES 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 LANDSEA HOMES P are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of LANDSEA HOMES i.e., LANDSEA HOMES and Jiangsu Expressway go up and down completely randomly.

Pair Corralation between LANDSEA HOMES and Jiangsu Expressway

Assuming the 90 days horizon LANDSEA HOMES P is expected to under-perform the Jiangsu Expressway. In addition to that, LANDSEA HOMES is 1.08 times more volatile than Jiangsu Expressway. It trades about -0.71 of its total potential returns per unit of risk. Jiangsu Expressway is currently generating about 0.32 per unit of volatility. If you would invest  91.00  in Jiangsu Expressway on October 6, 2024 and sell it today you would earn a total of  11.00  from holding Jiangsu Expressway or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

LANDSEA HOMES P  vs.  Jiangsu Expressway

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Jiangsu Expressway

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Expressway are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Jiangsu Expressway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with LANDSEA HOMES and Jiangsu Expressway

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

The idea behind LANDSEA HOMES P and Jiangsu Expressway 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.