Correlation Between Country Group and Quality Houses

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

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

Diversification Opportunities for Country Group and Quality Houses

0.68

Correlation Coefficient

Country Group  Quality Houses

Poor diversification

The 3 months correlation between Country and Quality is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Country Group Holdings and Quality Houses Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Houses Property and Country Group 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 Country Group Holdings are associated (or correlated) with Quality Houses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Houses Property has no effect on the direction of Country Group i.e., Country Group and Quality Houses go up and down completely randomly.

Pair Corralation between Country Group and Quality Houses

Assuming the 90 days trading horizon Country Group Holdings is expected to generate 0.19 times more return on investment than Quality Houses. However, Country Group Holdings is 5.15 times less risky than Quality Houses. It trades about -0.19 of its potential returns per unit of risk. Quality Houses Property is currently generating about -0.15 per unit of risk. If you would invest  68.00  in Country Group Holdings on November 28, 2024 and sell it today you would lose (18.00) from holding Country Group Holdings or give up 26.47% of portfolio value over 90 days.

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

Country Group Holdings  vs.  Quality Houses Property

Country Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Country Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Quality Houses Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quality Houses Property has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the fund institutional investors.

Pair Trading with Country Group and Quality Houses

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

The idea behind Country Group Holdings and Quality Houses Property 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.