Correlation Between New Residential and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both New Residential and CapitaLand Investment 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 New Residential and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and CapitaLand Investment Limited, you can compare the effects of market volatilities on New Residential and CapitaLand Investment 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 New Residential with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and CapitaLand Investment.
Diversification Opportunities for New Residential and CapitaLand Investment
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and CapitaLand is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and New Residential 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 New Residential Investment are associated (or correlated) with CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of New Residential i.e., New Residential and CapitaLand Investment go up and down completely randomly.
Pair Corralation between New Residential and CapitaLand Investment
Assuming the 90 days trading horizon New Residential Investment is expected to generate 1.11 times more return on investment than CapitaLand Investment. However, New Residential is 1.11 times more volatile than CapitaLand Investment Limited. It trades about 0.34 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.06 per unit of risk. If you would invest 965.00 in New Residential Investment on August 28, 2024 and sell it today you would earn a total of 87.00 from holding New Residential Investment or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. CapitaLand Investment Limited
Performance |
| Timeline |
| New Residential Inve |
| CapitaLand Investment |
New Residential and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and CapitaLand Investment
The main advantage of trading using opposite New Residential and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, CapitaLand Investment 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 CapitaLand Investment will offset losses from the drop in CapitaLand Investment's long position.| New Residential vs. Xtrackers ShortDAX | New Residential vs. Xtrackers LevDAX | New Residential vs. Lyxor 1 |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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