Correlation Between Country Garden and Wharf Holdings

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

Diversification Opportunities for Country Garden and Wharf Holdings

-0.22

Correlation Coefficient

Country Garden  Wharf Holdings

Very good diversification

The 3 months correlation between Country and Wharf is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Country Garden Holdings and Wharf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf Holdings 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 Wharf Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Holdings has no effect on the direction of Country Garden i.e., Country Garden and Wharf Holdings go up and down completely randomly.

Pair Corralation between Country Garden and Wharf Holdings

Assuming the 90 days horizon Country Garden Holdings is expected to under-perform the Wharf Holdings. In addition to that, Country Garden is 1.96 times more volatile than Wharf Holdings. It trades about -0.12 of its total potential returns per unit of risk. Wharf Holdings is currently generating about -0.01 per unit of volatility. If you would invest  589.00  in Wharf Holdings on October 7, 2024 and sell it today you would lose (39.00) from holding Wharf Holdings or give up 6.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

Country Garden Holdings  vs.  Wharf Holdings

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Wharf Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wharf Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Wharf Holdings 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 Wharf Holdings

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

The idea behind Country Garden Holdings and Wharf 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..