Correlation Between City Developments and Xinyuan Real
Can any of the company-specific risk be diversified away by investing in both City Developments and Xinyuan Real 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 City Developments and Xinyuan Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Developments Limited and Xinyuan Real Estate, you can compare the effects of market volatilities on City Developments and Xinyuan Real 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 City Developments with a short position of Xinyuan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Developments and Xinyuan Real.
Diversification Opportunities for City Developments and Xinyuan Real
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between City and Xinyuan is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding City Developments Limited and Xinyuan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyuan Real Estate and City Developments 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 City Developments Limited are associated (or correlated) with Xinyuan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyuan Real Estate has no effect on the direction of City Developments i.e., City Developments and Xinyuan Real go up and down completely randomly.
Pair Corralation between City Developments and Xinyuan Real
Assuming the 90 days horizon City Developments Limited is expected to under-perform the Xinyuan Real. But the pink sheet apears to be less risky and, when comparing its historical volatility, City Developments Limited is 1.43 times less risky than Xinyuan Real. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Xinyuan Real Estate is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 275.00 in Xinyuan Real Estate on January 26, 2024 and sell it today you would lose (2.00) from holding Xinyuan Real Estate or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Developments Limited vs. Xinyuan Real Estate
Performance |
| Timeline |
| City Developments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xinyuan Real Estate |
City Developments and Xinyuan Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Developments and Xinyuan Real
The main advantage of trading using opposite City Developments and Xinyuan Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Developments position performs unexpectedly, Xinyuan Real 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 Xinyuan Real will offset losses from the drop in Xinyuan Real's long position.The idea behind City Developments Limited and Xinyuan Real Estate 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.| Xinyuan Real vs. Transcontinental Realty Investors | Xinyuan Real vs. Anywhere Real Estate | Xinyuan Real vs. Re Max Holding | Xinyuan Real vs. New England Realty |
Check out your portfolio center.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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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