Correlation Between CapitaLand Investment and 67077MAU2

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Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and 67077MAU2 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 67077MAU2 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 NUTRIEN LTD, you can compare the effects of market volatilities on CapitaLand Investment and 67077MAU2 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 67077MAU2. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and 67077MAU2.

Diversification Opportunities for CapitaLand Investment and 67077MAU2

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between CapitaLand and 67077MAU2 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and NUTRIEN LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NUTRIEN LTD 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 67077MAU2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NUTRIEN LTD has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and 67077MAU2 go up and down completely randomly.

Pair Corralation between CapitaLand Investment and 67077MAU2

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the 67077MAU2. But the pink sheet apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.24 times less risky than 67077MAU2. The pink sheet trades about -0.21 of its potential returns per unit of risk. The NUTRIEN LTD is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  9,186  in NUTRIEN LTD on August 31, 2024 and sell it today you would earn a total of  959.00  from holding NUTRIEN LTD or generate 10.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy81.82%
ValuesDaily Returns

CapitaLand Investment Limited  vs.  NUTRIEN LTD

 Performance 
       Timeline  
CapitaLand Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CapitaLand Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
NUTRIEN LTD 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NUTRIEN LTD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, 67077MAU2 sustained solid returns over the last few months and may actually be approaching a breakup point.

CapitaLand Investment and 67077MAU2 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CapitaLand Investment and 67077MAU2

The main advantage of trading using opposite CapitaLand Investment and 67077MAU2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, 67077MAU2 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 67077MAU2 will offset losses from the drop in 67077MAU2's long position.
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The idea behind CapitaLand Investment Limited and NUTRIEN LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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