Correlation Between Land and LH Shopping

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

By analyzing existing cross correlation between Land and Houses and LH Shopping Centers, you can compare the effects of market volatilities on Land and LH Shopping 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 Land with a short position of LH Shopping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Land and LH Shopping.

Diversification Opportunities for Land and LH Shopping

-0.92

Correlation Coefficient

Land  LH Shopping

Pay attention - limited upside

The 3 months correlation between Land and LHSC is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and LH Shopping Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LH Shopping Centers and Land 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 Land and Houses are associated (or correlated) with LH Shopping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LH Shopping Centers has no effect on the direction of Land i.e., Land and LH Shopping go up and down completely randomly.

Pair Corralation between Land and LH Shopping

Assuming the 90 days trading horizon Land and Houses is expected to under-perform the LH Shopping. In addition to that, Land is 14.3 times more volatile than LH Shopping Centers. It trades about -0.15 of its total potential returns per unit of risk. LH Shopping Centers is currently generating about 0.16 per unit of volatility. If you would invest  1,110  in LH Shopping Centers on December 29, 2024 and sell it today you would earn a total of  100.00  from holding LH Shopping Centers or generate 9.01% return on investment over 90 days.

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

Land and Houses  vs.  LH Shopping Centers

Land and Houses

Risk-Adjusted Performance

Very Weak

Over the last 90 days Land and Houses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

LH Shopping Centers

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LH Shopping Centers are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, LH Shopping may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Land and LH Shopping

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

The idea behind Land and Houses and LH Shopping Centers 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.