Correlation Between CapitaLand Investment and Legal General
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and Legal General 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 Legal General 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 Legal General Group, you can compare the effects of market volatilities on CapitaLand Investment and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Legal General.
Diversification Opportunities for CapitaLand Investment and Legal General
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CapitaLand and Legal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Legal General go up and down completely randomly.
Pair Corralation between CapitaLand Investment and Legal General
Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Legal General. In addition to that, CapitaLand Investment is 1.89 times more volatile than Legal General Group. It trades about -0.22 of its total potential returns per unit of risk. Legal General Group is currently generating about -0.11 per unit of volatility. If you would invest 1,447 in Legal General Group on August 28, 2024 and sell it today you would lose (39.00) from holding Legal General Group or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. Legal General Group
Performance |
| Timeline |
| CapitaLand Investment |
| Legal General Group |
CapitaLand Investment and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and Legal General
The main advantage of trading using opposite CapitaLand Investment and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| CapitaLand Investment vs. IRSA Inversiones Y | CapitaLand Investment vs. Anywhere Real Estate | CapitaLand Investment vs. Newmark Group | CapitaLand Investment vs. New York City |
| Legal General vs. Inflection Point Acquisition | Legal General vs. Aldel Financial II | Legal General vs. Eldorado Gold Corp | Legal General vs. CapitaLand Investment Limited |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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