Correlation Between CapitaLand Investment and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and Sanyo Chemical 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 Sanyo Chemical 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on CapitaLand Investment and Sanyo Chemical 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Sanyo Chemical.
Diversification Opportunities for CapitaLand Investment and Sanyo Chemical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CapitaLand and Sanyo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Sanyo Chemical go up and down completely randomly.
Pair Corralation between CapitaLand Investment and Sanyo Chemical
Assuming the 90 days horizon CapitaLand Investment Limited is expected to generate 1.67 times more return on investment than Sanyo Chemical. However, CapitaLand Investment is 1.67 times more volatile than Sanyo Chemical Industries. It trades about -0.05 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.09 per unit of risk. If you would invest 192.00 in CapitaLand Investment Limited on September 1, 2024 and sell it today you would lose (3.00) from holding CapitaLand Investment Limited or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. Sanyo Chemical Industries
Performance |
| Timeline |
| CapitaLand Investment |
| Sanyo Chemical Industries |
CapitaLand Investment and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and Sanyo Chemical
The main advantage of trading using opposite CapitaLand Investment and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, Sanyo Chemical 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.| CapitaLand Investment vs. CBRE Group Class | CapitaLand Investment vs. Superior Plus Corp | CapitaLand Investment vs. NMI Holdings | CapitaLand Investment vs. Origin Agritech |
| Sanyo Chemical vs. The Sherwin Williams | Sanyo Chemical vs. SIKA AG UNSPADR | Sanyo Chemical vs. LyondellBasell Industries NV | Sanyo Chemical vs. Albemarle |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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