Correlation Between CapitaLand Investment and African Agriculture
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and African Agriculture 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 African Agriculture 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 African Agriculture Holdings, you can compare the effects of market volatilities on CapitaLand Investment and African Agriculture 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 African Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and African Agriculture.
Diversification Opportunities for CapitaLand Investment and African Agriculture
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CapitaLand and African is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and African Agriculture Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Agriculture 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 African Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Agriculture has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and African Agriculture go up and down completely randomly.
Pair Corralation between CapitaLand Investment and African Agriculture
Assuming the 90 days horizon CapitaLand Investment is expected to generate 273.32 times less return on investment than African Agriculture. But when comparing it to its historical volatility, CapitaLand Investment Limited is 15.66 times less risky than African Agriculture. It trades about 0.0 of its potential returns per unit of risk. African Agriculture Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.69 in African Agriculture Holdings on September 5, 2024 and sell it today you would lose (1.32) from holding African Agriculture Holdings or give up 78.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 57.26% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. African Agriculture Holdings
Performance |
| Timeline |
| CapitaLand Investment |
| African Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
CapitaLand Investment and African Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and African Agriculture
The main advantage of trading using opposite CapitaLand Investment and African Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, African Agriculture 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 African Agriculture will offset losses from the drop in African Agriculture's long position.| CapitaLand Investment vs. IRSA Inversiones Y | CapitaLand Investment vs. Anywhere Real Estate | CapitaLand Investment vs. Newmark Group | CapitaLand Investment vs. Wharf Real Estate |
| African Agriculture vs. Analog Devices | African Agriculture vs. JetBlue Airways Corp | African Agriculture vs. NETGEAR | African Agriculture vs. Air Transport Services |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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