Correlation Between Guangzhou and Sino Land

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

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

Diversification Opportunities for Guangzhou and Sino Land

-0.63

Correlation Coefficient

Guangzhou  Sino Land

Excellent diversification

The 3 months correlation between Guangzhou and Sino is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou RF Properties and Sino Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Land and Guangzhou 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 Guangzhou RF Properties are associated (or correlated) with Sino Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Land has no effect on the direction of Guangzhou i.e., Guangzhou and Sino Land go up and down completely randomly.

Pair Corralation between Guangzhou and Sino Land

If you would invest  23.00  in Guangzhou RF Properties on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Guangzhou RF Properties or generate 0.0% return on investment over 90 days.

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

Guangzhou RF Properties  vs.  Sino Land Co

Guangzhou RF Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou RF Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Guangzhou reported solid returns over the last few months and may actually be approaching a breakup point.

Sino Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sino Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guangzhou and Sino Land

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

The idea behind Guangzhou RF Properties and Sino Land 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.