Correlation Between Greenland Hong and TIMES CHINA

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

By analyzing existing cross correlation between Greenland Hong Kong and TIMES CHINA HLDGS, you can compare the effects of market volatilities on Greenland Hong and TIMES CHINA 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 Greenland Hong with a short position of TIMES CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenland Hong and TIMES CHINA.

Diversification Opportunities for Greenland Hong and TIMES CHINA

0.71

Correlation Coefficient

Greenland Hong  TIMES CHINA

Poor diversification

The 3 months correlation between Greenland and TIMES is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Greenland Hong Kong and TIMES CHINA HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIMES CHINA HLDGS and Greenland Hong 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 Greenland Hong Kong are associated (or correlated) with TIMES CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIMES CHINA HLDGS has no effect on the direction of Greenland Hong i.e., Greenland Hong and TIMES CHINA go up and down completely randomly.

Pair Corralation between Greenland Hong and TIMES CHINA

Assuming the 90 days trading horizon Greenland Hong is expected to generate 11.16 times less return on investment than TIMES CHINA. In addition to that, Greenland Hong is 1.16 times more volatile than TIMES CHINA HLDGS. It trades about 0.02 of its total potential returns per unit of risk. TIMES CHINA HLDGS is currently generating about 0.27 per unit of volatility. If you would invest  2.65  in TIMES CHINA HLDGS on September 23, 2024 and sell it today you would earn a total of  0.95  from holding TIMES CHINA HLDGS or generate 35.85% return on investment over 90 days.

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

Greenland Hong Kong  vs.  TIMES CHINA HLDGS

Greenland Hong Kong

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greenland Hong Kong are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Greenland Hong reported solid returns over the last few months and may actually be approaching a breakup point.

TIMES CHINA HLDGS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TIMES CHINA HLDGS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, TIMES CHINA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greenland Hong and TIMES CHINA

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

The idea behind Greenland Hong Kong and TIMES CHINA HLDGS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.