Correlation Between LH Shopping and Land

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

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

Diversification Opportunities for LH Shopping and Land

0.28

Correlation Coefficient

LH Shopping  Land

Modest diversification

The 3 months correlation between LHSC and Land is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding LH Shopping Centers and Land and Houses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land and Houses and LH Shopping 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 LH Shopping Centers are associated (or correlated) with Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land and Houses has no effect on the direction of LH Shopping i.e., LH Shopping and Land go up and down completely randomly.

Pair Corralation between LH Shopping and Land

Assuming the 90 days trading horizon LH Shopping is expected to generate 62.12 times less return on investment than Land. But when comparing it to its historical volatility, LH Shopping Centers is 78.14 times less risky than Land. It trades about 0.14 of its potential returns per unit of risk. Land and Houses is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Land and Houses on August 31, 2024 and sell it today you would earn a total of  15.00  from holding Land and Houses or generate 2.83% return on investment over 90 days.

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

LH Shopping Centers  vs.  Land and Houses

LH Shopping Centers

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LH Shopping Centers are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, LH Shopping disclosed solid returns over the last few months and may actually be approaching a breakup point.

Land and Houses

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Land and Houses are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Land disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LH Shopping and Land

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

The idea behind LH Shopping Centers and Land and Houses 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.