Correlation Between Western Sierra and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both Western Sierra 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 Western Sierra and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Sierra Mining and CapitaLand Investment Limited, you can compare the effects of market volatilities on Western Sierra 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 Western Sierra with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and CapitaLand Investment.
Diversification Opportunities for Western Sierra and CapitaLand Investment
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and CapitaLand is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Western Sierra 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 Western Sierra Mining 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 Western Sierra i.e., Western Sierra and CapitaLand Investment go up and down completely randomly.
Pair Corralation between Western Sierra and CapitaLand Investment
Given the investment horizon of 90 days Western Sierra Mining is expected to generate 22.46 times more return on investment than CapitaLand Investment. However, Western Sierra is 22.46 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 0.01 per unit of risk. If you would invest 8.45 in Western Sierra Mining on September 2, 2024 and sell it today you would lose (7.77) from holding Western Sierra Mining or give up 91.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Western Sierra Mining vs. CapitaLand Investment Limited
Performance |
| Timeline |
| Western Sierra Mining |
| CapitaLand Investment |
Western Sierra and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Sierra and CapitaLand Investment
The main advantage of trading using opposite Western Sierra and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Sierra 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.| Western Sierra vs. Holloman Energy Corp | Western Sierra vs. cbdMD Inc | Western Sierra vs. Evolus Inc | Western Sierra vs. CV Sciences |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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