Correlation Between CapitaLand Investment and Ecolab
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and Ecolab 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 Ecolab 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 Ecolab Inc, you can compare the effects of market volatilities on CapitaLand Investment and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Ecolab.
Diversification Opportunities for CapitaLand Investment and Ecolab
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CapitaLand and Ecolab is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Ecolab go up and down completely randomly.
Pair Corralation between CapitaLand Investment and Ecolab
Assuming the 90 days horizon CapitaLand Investment is expected to generate 1.62 times less return on investment than Ecolab. In addition to that, CapitaLand Investment is 3.65 times more volatile than Ecolab Inc. It trades about 0.02 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.1 per unit of volatility. If you would invest 14,031 in Ecolab Inc on September 12, 2024 and sell it today you would earn a total of 10,674 from holding Ecolab Inc or generate 76.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. Ecolab Inc
Performance |
| Timeline |
| CapitaLand Investment |
| Ecolab Inc |
CapitaLand Investment and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and Ecolab
The main advantage of trading using opposite CapitaLand Investment and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab'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 |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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