Correlation Between GuocoLand and OPEN HOUSE

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

By analyzing existing cross correlation between GuocoLand Limited and OPEN HOUSE GROUP, you can compare the effects of market volatilities on GuocoLand and OPEN 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 GuocoLand with a short position of OPEN HOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GuocoLand and OPEN HOUSE.

Diversification Opportunities for GuocoLand and OPEN HOUSE

0.64

Correlation Coefficient

GuocoLand  OPEN HOUSE

Poor diversification

The 3 months correlation between GuocoLand and OPEN is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GuocoLand Limited and OPEN HOUSE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPEN HOUSE GROUP and GuocoLand 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 GuocoLand Limited are associated (or correlated) with OPEN HOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPEN HOUSE GROUP has no effect on the direction of GuocoLand i.e., GuocoLand and OPEN HOUSE go up and down completely randomly.

Pair Corralation between GuocoLand and OPEN HOUSE

Assuming the 90 days trading horizon GuocoLand Limited is expected to under-perform the OPEN HOUSE. But the stock apears to be less risky and, when comparing its historical volatility, GuocoLand Limited is 3.44 times less risky than OPEN HOUSE. The stock trades about -0.07 of its potential returns per unit of risk. The OPEN HOUSE GROUP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,480  in OPEN HOUSE GROUP on December 2, 2024 and sell it today you would earn a total of  0.00  from holding OPEN HOUSE GROUP or generate 0.0% return on investment over 90 days.

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

GuocoLand Limited  vs.  OPEN HOUSE GROUP

GuocoLand Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days GuocoLand Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GuocoLand is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

OPEN HOUSE GROUP

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GuocoLand and OPEN HOUSE

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

The idea behind GuocoLand Limited and OPEN HOUSE GROUP 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.