Correlation Between Yanlord Land and City Developments

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

By analyzing existing cross correlation between Yanlord Land Group and City Developments Limited, you can compare the effects of market volatilities on Yanlord Land and City Developments 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 Yanlord Land with a short position of City Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanlord Land and City Developments.

Diversification Opportunities for Yanlord Land and City Developments

0.77

Correlation Coefficient

Yanlord Land  City Developments

Poor diversification

The 3 months correlation between Yanlord and City is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Yanlord Land Group and City Developments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Developments and Yanlord 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 Yanlord Land Group are associated (or correlated) with City Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Developments has no effect on the direction of Yanlord Land i.e., Yanlord Land and City Developments go up and down completely randomly.

Pair Corralation between Yanlord Land and City Developments

If you would invest  438.00  in City Developments Limited on February 3, 2024 and sell it today you would earn a total of  4.00  from holding City Developments Limited or generate 0.91% return on investment over 90 days.

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

Yanlord Land Group  vs.  City Developments Limited

Yanlord Land Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yanlord Land Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

City Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days City Developments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Yanlord Land and City Developments

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

The idea behind Yanlord Land Group and City Developments Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.