Correlation Between FIRST SHIP and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SHIP LEASE and CapitaLand Investment Limited, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and CapitaLand Investment.
Diversification Opportunities for FIRST SHIP and CapitaLand Investment
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FIRST and CapitaLand is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and CapitaLand Investment go up and down completely randomly.
Pair Corralation between FIRST SHIP and CapitaLand Investment
Assuming the 90 days horizon FIRST SHIP LEASE is expected to generate 2.23 times more return on investment than CapitaLand Investment. However, FIRST SHIP is 2.23 times more volatile than CapitaLand Investment Limited. It trades about 0.19 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.25 per unit of risk. If you would invest 1.98 in FIRST SHIP LEASE on November 3, 2024 and sell it today you would earn a total of 0.40 from holding FIRST SHIP LEASE or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SHIP LEASE vs. CapitaLand Investment Limited
Performance |
| Timeline |
| FIRST SHIP LEASE |
| CapitaLand Investment |
FIRST SHIP and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SHIP and CapitaLand Investment
The main advantage of trading using opposite FIRST SHIP and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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.| FIRST SHIP vs. BROADSTNET LEADL 00025 | FIRST SHIP vs. ADRIATIC METALS LS 013355 | FIRST SHIP vs. MAGNUM MINING EXP | FIRST SHIP vs. Yuexiu Transport Infrastructure |
| CapitaLand Investment vs. Tradegate AG Wertpapierhandelsbank | CapitaLand Investment vs. MOVIE GAMES SA | CapitaLand Investment vs. GEAR4MUSIC LS 10 | CapitaLand Investment vs. UNIVERSAL MUSIC GROUP |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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