Correlation Between INDIKA ENERGY and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both INDIKA ENERGY 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 INDIKA ENERGY and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDIKA ENERGY and CapitaLand Investment Limited, you can compare the effects of market volatilities on INDIKA ENERGY 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 INDIKA ENERGY with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDIKA ENERGY and CapitaLand Investment.
Diversification Opportunities for INDIKA ENERGY and CapitaLand Investment
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INDIKA and CapitaLand is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and INDIKA ENERGY 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 INDIKA ENERGY 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 INDIKA ENERGY i.e., INDIKA ENERGY and CapitaLand Investment go up and down completely randomly.
Pair Corralation between INDIKA ENERGY and CapitaLand Investment
Assuming the 90 days trading horizon INDIKA ENERGY is expected to under-perform the CapitaLand Investment. In addition to that, INDIKA ENERGY is 3.1 times more volatile than CapitaLand Investment Limited. It trades about -0.01 of its total potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.01 per unit of volatility. If you would invest 216.00 in CapitaLand Investment Limited on September 4, 2024 and sell it today you would lose (26.00) from holding CapitaLand Investment Limited or give up 12.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
INDIKA ENERGY vs. CapitaLand Investment Limited
Performance |
| Timeline |
| INDIKA ENERGY |
| CapitaLand Investment |
INDIKA ENERGY and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDIKA ENERGY and CapitaLand Investment
The main advantage of trading using opposite INDIKA ENERGY and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDIKA ENERGY 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.| INDIKA ENERGY vs. TOTAL GABON | INDIKA ENERGY vs. Walgreens Boots Alliance | INDIKA ENERGY vs. Peak Resources Limited |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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