Correlation Between KLA Tencor and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both KLA Tencor 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 KLA Tencor and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and CapitaLand Investment Limited, you can compare the effects of market volatilities on KLA Tencor 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 KLA Tencor with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and CapitaLand Investment.
Diversification Opportunities for KLA Tencor and CapitaLand Investment
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KLA and CapitaLand is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and CapitaLand Investment go up and down completely randomly.
Pair Corralation between KLA Tencor and CapitaLand Investment
Given the investment horizon of 90 days KLA Tencor is expected to generate 1.04 times more return on investment than CapitaLand Investment. However, KLA Tencor is 1.04 times more volatile than CapitaLand Investment Limited. It trades about -0.1 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.21 per unit of risk. If you would invest 67,121 in KLA Tencor on August 26, 2024 and sell it today you would lose (3,166) from holding KLA Tencor or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. CapitaLand Investment Limited
Performance |
| Timeline |
| KLA Tencor |
| CapitaLand Investment |
KLA Tencor and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and CapitaLand Investment
The main advantage of trading using opposite KLA Tencor and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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.The idea behind KLA Tencor and CapitaLand Investment Limited 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.| CapitaLand Investment vs. IRSA Inversiones Y | CapitaLand Investment vs. Anywhere Real Estate | CapitaLand Investment vs. Newmark Group | CapitaLand Investment vs. New York City |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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