Correlation Between United Fire and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both United Fire 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 United Fire and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and CapitaLand Investment Limited, you can compare the effects of market volatilities on United Fire 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 United Fire with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and CapitaLand Investment.
Diversification Opportunities for United Fire and CapitaLand Investment
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and CapitaLand is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and United Fire 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 United Fire Group 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 United Fire i.e., United Fire and CapitaLand Investment go up and down completely randomly.
Pair Corralation between United Fire and CapitaLand Investment
Given the investment horizon of 90 days United Fire Group is expected to generate 2.97 times more return on investment than CapitaLand Investment. However, United Fire is 2.97 times more volatile than CapitaLand Investment Limited. It trades about 0.36 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 1,993 in United Fire Group on August 31, 2024 and sell it today you would earn a total of 1,015 from holding United Fire Group or generate 50.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. CapitaLand Investment Limited
Performance |
| Timeline |
| United Fire Group |
| CapitaLand Investment |
United Fire and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and CapitaLand Investment
The main advantage of trading using opposite United Fire and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire 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.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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