Correlation Between FIREWEED METALS and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both FIREWEED METALS 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 FIREWEED METALS and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIREWEED METALS P and CapitaLand Investment Limited, you can compare the effects of market volatilities on FIREWEED METALS 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 FIREWEED METALS with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIREWEED METALS and CapitaLand Investment.
Diversification Opportunities for FIREWEED METALS and CapitaLand Investment
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIREWEED and CapitaLand is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding FIREWEED METALS P and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and FIREWEED METALS 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 FIREWEED METALS P 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 FIREWEED METALS i.e., FIREWEED METALS and CapitaLand Investment go up and down completely randomly.
Pair Corralation between FIREWEED METALS and CapitaLand Investment
Assuming the 90 days horizon FIREWEED METALS P is expected to generate 2.48 times more return on investment than CapitaLand Investment. However, FIREWEED METALS is 2.48 times more volatile than CapitaLand Investment Limited. It trades about 0.04 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 66.00 in FIREWEED METALS P on August 31, 2024 and sell it today you would earn a total of 25.00 from holding FIREWEED METALS P or generate 37.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIREWEED METALS P vs. CapitaLand Investment Limited
Performance |
| Timeline |
| FIREWEED METALS P |
| CapitaLand Investment |
FIREWEED METALS and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIREWEED METALS and CapitaLand Investment
The main advantage of trading using opposite FIREWEED METALS and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIREWEED METALS 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.| FIREWEED METALS vs. Rio Tinto Group | FIREWEED METALS vs. Liontown Resources Limited | FIREWEED METALS vs. American Lithium Corp |
| CapitaLand Investment vs. CBRE Group Class | 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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