Correlation Between CapitaLand Investment and DIVERSIFIED ROYALTY
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and DIVERSIFIED ROYALTY 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 CapitaLand Investment and DIVERSIFIED ROYALTY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapitaLand Investment Limited and DIVERSIFIED ROYALTY, you can compare the effects of market volatilities on CapitaLand Investment and DIVERSIFIED ROYALTY 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 CapitaLand Investment with a short position of DIVERSIFIED ROYALTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and DIVERSIFIED ROYALTY.
Diversification Opportunities for CapitaLand Investment and DIVERSIFIED ROYALTY
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between CapitaLand and DIVERSIFIED is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and DIVERSIFIED ROYALTY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIVERSIFIED ROYALTY and CapitaLand Investment 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 CapitaLand Investment Limited are associated (or correlated) with DIVERSIFIED ROYALTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIVERSIFIED ROYALTY has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and DIVERSIFIED ROYALTY go up and down completely randomly.
Pair Corralation between CapitaLand Investment and DIVERSIFIED ROYALTY
Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the DIVERSIFIED ROYALTY. But the stock apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.7 times less risky than DIVERSIFIED ROYALTY. The stock trades about -0.16 of its potential returns per unit of risk. The DIVERSIFIED ROYALTY is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 198.00 in DIVERSIFIED ROYALTY on September 13, 2024 and sell it today you would earn a total of 0.00 from holding DIVERSIFIED ROYALTY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. DIVERSIFIED ROYALTY
Performance |
| Timeline |
| CapitaLand Investment |
| DIVERSIFIED ROYALTY |
CapitaLand Investment and DIVERSIFIED ROYALTY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and DIVERSIFIED ROYALTY
The main advantage of trading using opposite CapitaLand Investment and DIVERSIFIED ROYALTY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, DIVERSIFIED ROYALTY 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 DIVERSIFIED ROYALTY will offset losses from the drop in DIVERSIFIED ROYALTY's long position.| CapitaLand Investment vs. Superior Plus Corp | CapitaLand Investment vs. SIVERS SEMICONDUCTORS AB | CapitaLand Investment vs. Reliance Steel Aluminum | CapitaLand Investment vs. CHINA HUARONG ENERHD 50 |
| DIVERSIFIED ROYALTY vs. Federal Home Loan | DIVERSIFIED ROYALTY vs. Superior Plus Corp | DIVERSIFIED ROYALTY vs. SIVERS SEMICONDUCTORS AB | DIVERSIFIED ROYALTY vs. Norsk Hydro ASA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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