Correlation Between CapitaLand Investment and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and Geely Automobile 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 Geely Automobile 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 Geely Automobile Holdings, you can compare the effects of market volatilities on CapitaLand Investment and Geely Automobile 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 Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Geely Automobile.
Diversification Opportunities for CapitaLand Investment and Geely Automobile
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CapitaLand and Geely is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Geely Automobile go up and down completely randomly.
Pair Corralation between CapitaLand Investment and Geely Automobile
Assuming the 90 days horizon CapitaLand Investment is expected to generate 8.91 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, CapitaLand Investment Limited is 2.32 times less risky than Geely Automobile. It trades about 0.04 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 93.00 in Geely Automobile Holdings on September 2, 2024 and sell it today you would earn a total of 74.00 from holding Geely Automobile Holdings or generate 79.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. Geely Automobile Holdings
Performance |
| Timeline |
| CapitaLand Investment |
| Geely Automobile Holdings |
CapitaLand Investment and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and Geely Automobile
The main advantage of trading using opposite CapitaLand Investment and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| CapitaLand Investment vs. GFL ENVIRONM | CapitaLand Investment vs. Caltagirone SpA | CapitaLand Investment vs. RELIANCE STEEL AL | CapitaLand Investment vs. MITSUBISHI STEEL MFG |
| Geely Automobile vs. ADRIATIC METALS LS 013355 | Geely Automobile vs. LION ONE METALS | Geely Automobile vs. GRIFFIN MINING LTD | Geely Automobile vs. Scientific Games |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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