Correlation Between NetEase and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both NetEase 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 NetEase and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and CapitaLand Investment Limited, you can compare the effects of market volatilities on NetEase 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 NetEase with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and CapitaLand Investment.
Diversification Opportunities for NetEase and CapitaLand Investment
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between NetEase and CapitaLand is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and NetEase 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 NetEase 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 NetEase i.e., NetEase and CapitaLand Investment go up and down completely randomly.
Pair Corralation between NetEase and CapitaLand Investment
Given the investment horizon of 90 days NetEase is expected to generate 0.54 times more return on investment than CapitaLand Investment. However, NetEase is 1.84 times less risky than CapitaLand Investment. It trades about 0.03 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 8,050 in NetEase on December 4, 2024 and sell it today you would earn a total of 2,010 from holding NetEase or generate 24.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NetEase vs. CapitaLand Investment Limited
Performance |
| Timeline |
| NetEase |
| CapitaLand Investment |
NetEase and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NetEase and CapitaLand Investment
The main advantage of trading using opposite NetEase and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase 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.| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
| CapitaLand Investment vs. IRSA Inversiones Y | CapitaLand Investment vs. Anywhere Real Estate | CapitaLand Investment vs. Newmark Group | CapitaLand Investment vs. Wharf Real Estate |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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