Correlation Between Sino Land and Landsea Homes

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

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

Diversification Opportunities for Sino Land and Landsea Homes

-0.16

Correlation Coefficient

Sino Land  Landsea Homes

Good diversification

The 3 months correlation between Sino and Landsea is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sino Land Co and Landsea Homes Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landsea Homes Corp and Sino 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 Sino Land Co are associated (or correlated) with Landsea Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landsea Homes Corp has no effect on the direction of Sino Land i.e., Sino Land and Landsea Homes go up and down completely randomly.

Pair Corralation between Sino Land and Landsea Homes

Assuming the 90 days horizon Sino Land Co is expected to generate 0.64 times more return on investment than Landsea Homes. However, Sino Land Co is 1.56 times less risky than Landsea Homes. It trades about 0.03 of its potential returns per unit of risk. Landsea Homes Corp is currently generating about -0.01 per unit of risk. If you would invest  482.00  in Sino Land Co on September 3, 2024 and sell it today you would earn a total of  26.00  from holding Sino Land Co or generate 5.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.78%
Values	Daily Returns

Sino Land Co  vs.  Landsea Homes Corp

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 fairly strong basic indicators, Sino Land is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Landsea Homes Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Landsea Homes Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Landsea Homes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sino Land and Landsea Homes

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

The idea behind Sino Land Co and Landsea Homes Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.