Correlation Between Iridium Communications and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and CapitaLand Investment Limited, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and CapitaLand Investment.
Diversification Opportunities for Iridium Communications and CapitaLand Investment
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Iridium and CapitaLand is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and CapitaLand Investment go up and down completely randomly.
Pair Corralation between Iridium Communications and CapitaLand Investment
Assuming the 90 days horizon Iridium Communications is expected to under-perform the CapitaLand Investment. In addition to that, Iridium Communications is 1.61 times more volatile than CapitaLand Investment Limited. It trades about -0.03 of its total potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.01 per unit of volatility. If you would invest 221.00 in CapitaLand Investment Limited on September 5, 2024 and sell it today you would lose (28.00) from holding CapitaLand Investment Limited or give up 12.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Iridium Communications vs. CapitaLand Investment Limited
Performance |
| Timeline |
| Iridium Communications |
| CapitaLand Investment |
Iridium Communications and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and CapitaLand Investment
The main advantage of trading using opposite Iridium Communications and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. Nufarm Limited | Iridium Communications vs. Titan Machinery | Iridium Communications vs. AUSTEVOLL SEAFOOD | Iridium Communications vs. Premier Foods PLC |
| CapitaLand Investment vs. Iridium Communications | CapitaLand Investment vs. Charter Communications | CapitaLand Investment vs. Apollo Investment Corp | CapitaLand Investment vs. WisdomTree Investments |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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