Correlation Between Forestar and Xinyuan Real
Can any of the company-specific risk be diversified away by investing in both Forestar 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 Forestar and Xinyuan Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forestar Group and Xinyuan Real Estate, you can compare the effects of market volatilities on Forestar 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 Forestar with a short position of Xinyuan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forestar and Xinyuan Real.
Diversification Opportunities for Forestar and Xinyuan Real
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Forestar and Xinyuan is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Forestar Group 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 Forestar 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 Forestar Group 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 Forestar i.e., Forestar and Xinyuan Real go up and down completely randomly.
Pair Corralation between Forestar and Xinyuan Real
Considering the 90-day investment horizon Forestar is expected to generate 32.04 times less return on investment than Xinyuan Real. But when comparing it to its historical volatility, Forestar Group is 4.58 times less risky than Xinyuan Real. It trades about 0.01 of its potential returns per unit of risk. Xinyuan Real Estate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 299.00 in Xinyuan Real Estate on July 31, 2024 and sell it today you would earn a total of 87.00 from holding Xinyuan Real Estate or generate 29.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Forestar Group vs. Xinyuan Real Estate
Performance |
Timeline |
Forestar Group |
Xinyuan Real Estate |
Forestar and Xinyuan Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Forestar and Xinyuan Real
The main advantage of trading using opposite Forestar and Xinyuan Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forestar 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.Forestar vs. American Realty Investors | Forestar vs. Landsea Homes Corp | Forestar vs. Five Point Holdings | Forestar vs. AMREP |
Xinyuan Real vs. AMREP | Xinyuan Real vs. Alset Ehome International | Xinyuan Real vs. Landsea Homes Corp | Xinyuan Real vs. Bayport International Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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