Correlation Between Henderson Land and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both Henderson Land 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 Henderson Land and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson Land Development and CapitaLand Investment Limited, you can compare the effects of market volatilities on Henderson Land 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 Henderson Land with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson Land and CapitaLand Investment.
Diversification Opportunities for Henderson Land and CapitaLand Investment
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Henderson and CapitaLand is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Land Development and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Henderson Land 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 Henderson Land Development 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 Henderson Land i.e., Henderson Land and CapitaLand Investment go up and down completely randomly.
Pair Corralation between Henderson Land and CapitaLand Investment
Assuming the 90 days horizon Henderson Land Development is expected to under-perform the CapitaLand Investment. In addition to that, Henderson Land is 1.07 times more volatile than CapitaLand Investment Limited. It trades about -0.09 of its total potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.05 per unit of volatility. If you would invest 195.00 in CapitaLand Investment Limited on August 28, 2024 and sell it today you would lose (3.00) from holding CapitaLand Investment Limited or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henderson Land Development vs. CapitaLand Investment Limited
Performance |
| Timeline |
| Henderson Land Devel |
| CapitaLand Investment |
Henderson Land and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson Land and CapitaLand Investment
The main advantage of trading using opposite Henderson Land and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson Land 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.| Henderson Land vs. WIMFARM SA EO | Henderson Land vs. TITAN MACHINERY | Henderson Land vs. Nufarm Limited | Henderson Land vs. Sumitomo Mitsui Construction |
| CapitaLand Investment vs. COSTAR GROUP INC | CapitaLand Investment vs. VONOVIA SE ADR | CapitaLand Investment vs. Vonovia SE |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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