Correlation Between CapitaLand Investment and Becton Dickinson
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and Becton Dickinson 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 Becton Dickinson 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 Becton Dickinson and, you can compare the effects of market volatilities on CapitaLand Investment and Becton Dickinson 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 Becton Dickinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Becton Dickinson.
Diversification Opportunities for CapitaLand Investment and Becton Dickinson
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CapitaLand and Becton is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Becton Dickinson and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becton Dickinson 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 Becton Dickinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becton Dickinson has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Becton Dickinson go up and down completely randomly.
Pair Corralation between CapitaLand Investment and Becton Dickinson
Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Becton Dickinson. But the stock apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.22 times less risky than Becton Dickinson. The stock trades about -0.09 of its potential returns per unit of risk. The Becton Dickinson and is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 21,652 in Becton Dickinson and on September 12, 2024 and sell it today you would lose (552.00) from holding Becton Dickinson and or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. Becton Dickinson and
Performance |
| Timeline |
| CapitaLand Investment |
| Becton Dickinson |
CapitaLand Investment and Becton Dickinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and Becton Dickinson
The main advantage of trading using opposite CapitaLand Investment and Becton Dickinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, Becton Dickinson 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 Becton Dickinson will offset losses from the drop in Becton Dickinson'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 |
| Becton Dickinson vs. Superior Plus Corp | Becton Dickinson vs. NMI Holdings | Becton Dickinson vs. SIVERS SEMICONDUCTORS AB | Becton Dickinson vs. NorAm Drilling AS |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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