Correlation Between Alset Ehome and China Vanke

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

By analyzing existing cross correlation between Alset Ehome International and China Vanke Co, you can compare the effects of market volatilities on Alset Ehome and China Vanke 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 Alset Ehome with a short position of China Vanke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alset Ehome and China Vanke.

Diversification Opportunities for Alset Ehome and China Vanke

0.59

Correlation Coefficient

Alset Ehome  China Vanke

Very weak diversification

The 3 months correlation between Alset and China is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alset Ehome International and China Vanke Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Vanke and Alset Ehome 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 Alset Ehome International are associated (or correlated) with China Vanke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Vanke has no effect on the direction of Alset Ehome i.e., Alset Ehome and China Vanke go up and down completely randomly.

Pair Corralation between Alset Ehome and China Vanke

Considering the 90-day investment horizon Alset Ehome is expected to generate 3.34 times less return on investment than China Vanke. But when comparing it to its historical volatility, Alset Ehome International is 1.22 times less risky than China Vanke. It trades about 0.05 of its potential returns per unit of risk. China Vanke Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  51.00  in China Vanke Co on September 3, 2024 and sell it today you would earn a total of  48.00  from holding China Vanke Co or generate 94.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Alset Ehome International  vs.  China Vanke Co

Alset Ehome International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alset Ehome International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Alset Ehome demonstrated solid returns over the last few months and may actually be approaching a breakup point.

China Vanke

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Vanke Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward-looking signals, China Vanke reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alset Ehome and China Vanke

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

The idea behind Alset Ehome International and China Vanke Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..