Correlation Between CapitaLand Investment and ECHO INVESTMENT

Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and ECHO 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 CapitaLand Investment and ECHO INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CapitaLand Investment Limited and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on CapitaLand Investment and ECHO 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 CapitaLand Investment with a short position of ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and ECHO INVESTMENT.

Diversification Opportunities for CapitaLand Investment and ECHO INVESTMENT

-0.06

Correlation Coefficient

CapitaLand Investment  ECHO INVESTMENT

Good diversification

The 3 months correlation between CapitaLand and ECHO is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY and CapitaLand Investment 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 CapitaLand Investment Limited are associated (or correlated) with ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and ECHO INVESTMENT go up and down completely randomly.

Pair Corralation between CapitaLand Investment and ECHO INVESTMENT

Assuming the 90 days horizon CapitaLand Investment is expected to generate 5.67 times less return on investment than ECHO INVESTMENT. But when comparing it to its historical volatility, CapitaLand Investment Limited is 1.27 times less risky than ECHO INVESTMENT. It trades about 0.01 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  94.00  in ECHO INVESTMENT ZY on September 3, 2024 and sell it today you would earn a total of  6.00  from holding ECHO INVESTMENT ZY or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CapitaLand Investment Limited  vs.  ECHO INVESTMENT ZY

CapitaLand Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CapitaLand Investment Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ECHO INVESTMENT ZY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ECHO INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CapitaLand Investment and ECHO INVESTMENT

The main advantage of trading using opposite CapitaLand Investment and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, ECHO 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.

The idea behind CapitaLand Investment Limited and ECHO INVESTMENT ZY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.