Correlation Between CapitaLand Investment and NetEase
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and NetEase 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 NetEase 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 NetEase, you can compare the effects of market volatilities on CapitaLand Investment and NetEase 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 NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and NetEase.
Diversification Opportunities for CapitaLand Investment and NetEase
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between CapitaLand and NetEase is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and NetEase go up and down completely randomly.
Pair Corralation between CapitaLand Investment and NetEase
Assuming the 90 days horizon CapitaLand Investment is expected to generate 2.87 times less return on investment than NetEase. In addition to that, CapitaLand Investment is 1.84 times more volatile than NetEase. It trades about 0.01 of its total potential returns per unit of risk. NetEase is currently generating about 0.03 per unit of volatility. If you would invest 8,050 in NetEase on December 4, 2024 and sell it today you would earn a total of 2,010 from holding NetEase or generate 24.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. NetEase
Performance |
| Timeline |
| CapitaLand Investment |
| NetEase |
CapitaLand Investment and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and NetEase
The main advantage of trading using opposite CapitaLand Investment and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase'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 |
| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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