Correlation Between Country Garden and Longfor Properties

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

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

Diversification Opportunities for Country Garden and Longfor Properties

0.0

Correlation Coefficient

Country Garden  Longfor Properties

Pay attention - limited upside

The 3 months correlation between Country and Longfor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Longfor Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Properties and Country Garden 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 Garden Holdings are associated (or correlated) with Longfor Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Properties has no effect on the direction of Country Garden i.e., Country Garden and Longfor Properties go up and down completely randomly.

Pair Corralation between Country Garden and Longfor Properties

If you would invest  1,278  in Longfor Properties Co on December 30, 2024 and sell it today you would earn a total of  87.00  from holding Longfor Properties Co or generate 6.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Country Garden Holdings  vs.  Longfor Properties Co

Country Garden Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Country Garden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Country Garden is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Longfor Properties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Longfor Properties Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Longfor Properties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Country Garden and Longfor Properties

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

The idea behind Country Garden Holdings and Longfor Properties 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.