Correlation Between GuocoLand and NEW WORLD

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

By analyzing existing cross correlation between GuocoLand Limited and NEW WORLD DEVCO, you can compare the effects of market volatilities on GuocoLand and NEW WORLD 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 GuocoLand with a short position of NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of GuocoLand and NEW WORLD.

Diversification Opportunities for GuocoLand and NEW WORLD

0.58

Correlation Coefficient

GuocoLand  NEW WORLD

Very weak diversification

The 3 months correlation between GuocoLand and NEW is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding GuocoLand Limited and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO and GuocoLand 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 GuocoLand Limited are associated (or correlated) with NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of GuocoLand i.e., GuocoLand and NEW WORLD go up and down completely randomly.

Pair Corralation between GuocoLand and NEW WORLD

Assuming the 90 days trading horizon GuocoLand is expected to generate 1.18 times less return on investment than NEW WORLD. But when comparing it to its historical volatility, GuocoLand Limited is 7.24 times less risky than NEW WORLD. It trades about 0.37 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  53.00  in NEW WORLD DEVCO on April 23, 2025 and sell it today you would earn a total of  6.00  from holding NEW WORLD DEVCO or generate 11.32% return on investment over 90 days.

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

GuocoLand Limited  vs.  NEW WORLD DEVCO

GuocoLand Limited

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GuocoLand unveiled solid returns over the last few months and may actually be approaching a breakup point.

NEW WORLD DEVCO

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NEW WORLD DEVCO are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, NEW WORLD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GuocoLand and NEW WORLD

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

The idea behind GuocoLand Limited and NEW WORLD DEVCO 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.