Correlation Between Bayport International and Country Garden

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

By analyzing existing cross correlation between Bayport International Holdings and Country Garden Holdings, you can compare the effects of market volatilities on Bayport International and Country Garden 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 Bayport International with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayport International and Country Garden.

Diversification Opportunities for Bayport International and Country Garden

-0.95

Correlation Coefficient

Bayport International  Country Garden

Pay attention - limited upside

The 3 months correlation between Bayport and Country is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bayport International Holdings and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings and Bayport International 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 Bayport International Holdings are associated (or correlated) with Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of Bayport International i.e., Bayport International and Country Garden go up and down completely randomly.

Pair Corralation between Bayport International and Country Garden

Given the investment horizon of 90 days Bayport International Holdings is expected to under-perform the Country Garden. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bayport International Holdings is 2.45 times less risky than Country Garden. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Country Garden Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  236.00  in Country Garden Holdings on October 22, 2024 and sell it today you would earn a total of  139.00  from holding Country Garden Holdings or generate 58.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	81.14%
Values	Daily Returns

Bayport International Holdings  vs.  Country Garden Holdings

Bayport International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayport International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Country Garden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Garden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Country Garden is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bayport International and Country Garden

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

The idea behind Bayport International Holdings and Country Garden Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.