Correlation Between CapitaLand Investment and REPUBLIC

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

Diversification Opportunities for CapitaLand Investment and REPUBLIC

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between CapitaLand and REPUBLIC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and REPUBLIC SVCS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REPUBLIC SVCS 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 REPUBLIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REPUBLIC SVCS INC has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and REPUBLIC go up and down completely randomly.

Pair Corralation between CapitaLand Investment and REPUBLIC

Assuming the 90 days horizon CapitaLand Investment is expected to generate 25.68 times less return on investment than REPUBLIC. But when comparing it to its historical volatility, CapitaLand Investment Limited is 10.22 times less risky than REPUBLIC. It trades about 0.02 of its potential returns per unit of risk. REPUBLIC SVCS INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,373  in REPUBLIC SVCS INC on September 14, 2024 and sell it today you would earn a total of  24.00  from holding REPUBLIC SVCS INC or generate 0.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy94.13%
ValuesDaily Returns

CapitaLand Investment Limited  vs.  REPUBLIC SVCS INC

 Performance 
       Timeline  
CapitaLand Investment 

Risk-Adjusted Performance

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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 nearly stable essential indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
REPUBLIC SVCS INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days REPUBLIC SVCS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, REPUBLIC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CapitaLand Investment and REPUBLIC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CapitaLand Investment and REPUBLIC

The main advantage of trading using opposite CapitaLand Investment and REPUBLIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, REPUBLIC 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 REPUBLIC will offset losses from the drop in REPUBLIC's long position.
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The idea behind CapitaLand Investment Limited and REPUBLIC SVCS INC 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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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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