Correlation Between Country Garden and Daiwa House

Can any of the company-specific risk be diversified away by investing in both Country Garden and Daiwa House 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 Daiwa House 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 Daiwa House Industry, you can compare the effects of market volatilities on Country Garden and Daiwa House 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 Daiwa House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Garden and Daiwa House.

Diversification Opportunities for Country Garden and Daiwa House

-0.79

Correlation Coefficient

Country Garden  Daiwa House

Pay attention - limited upside

The 3 months correlation between Country and Daiwa is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Daiwa House Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa House Industry 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 Daiwa House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa House Industry has no effect on the direction of Country Garden i.e., Country Garden and Daiwa House go up and down completely randomly.

Pair Corralation between Country Garden and Daiwa House

If you would invest  3,132  in Daiwa House Industry on September 4, 2024 and sell it today you would earn a total of  35.00  from holding Daiwa House Industry or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Country Garden Holdings  vs.  Daiwa House Industry

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.

Daiwa House Industry

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daiwa House Industry are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Daiwa House is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Country Garden and Daiwa House

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

The idea behind Country Garden Holdings and Daiwa House Industry 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.