Correlation Between Canon and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both Canon and CapitaLand Investment 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 Canon and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canon Inc and CapitaLand Investment Limited, you can compare the effects of market volatilities on Canon and CapitaLand Investment 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 Canon with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon and CapitaLand Investment.
Diversification Opportunities for Canon and CapitaLand Investment
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canon and CapitaLand is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Canon 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 Canon Inc are associated (or correlated) with CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of Canon i.e., Canon and CapitaLand Investment go up and down completely randomly.
Pair Corralation between Canon and CapitaLand Investment
Assuming the 90 days trading horizon Canon Inc is expected to generate 1.44 times more return on investment than CapitaLand Investment. However, Canon is 1.44 times more volatile than CapitaLand Investment Limited. It trades about 0.15 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about 0.01 per unit of risk. If you would invest 3,002 in Canon Inc on August 29, 2024 and sell it today you would earn a total of 152.00 from holding Canon Inc or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canon Inc vs. CapitaLand Investment Limited
Performance |
| Timeline |
| Canon Inc |
| CapitaLand Investment |
Canon and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canon and CapitaLand Investment
The main advantage of trading using opposite Canon and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon position performs unexpectedly, CapitaLand Investment 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 CapitaLand Investment will offset losses from the drop in CapitaLand Investment's long position.| Canon vs. CapitaLand Investment Limited | Canon vs. Monster Beverage Corp | Canon vs. Apollo Investment Corp | Canon vs. Virtus Investment Partners |
| CapitaLand Investment vs. Vonovia SE | CapitaLand Investment vs. Wharf Real Estate | CapitaLand Investment vs. Superior Plus Corp | CapitaLand Investment vs. NMI Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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