Correlation Between CapitaLand Investment and Alstria Office

Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and Alstria Office 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 Alstria Office 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 alstria office REIT AG, you can compare the effects of market volatilities on CapitaLand Investment and Alstria Office 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 Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Alstria Office.

Diversification Opportunities for CapitaLand Investment and Alstria Office

0.03

Correlation Coefficient

CapitaLand Investment  Alstria Office

Significant diversification

The 3 months correlation between CapitaLand and Alstria is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT 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 Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Alstria Office go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Alstria Office

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Alstria Office. But the stock apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 2.13 times less risky than Alstria Office. The stock trades about -0.02 of its potential returns per unit of risk. The alstria office REIT AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  344.00  in alstria office REIT AG on October 22, 2024 and sell it today you would earn a total of  190.00  from holding alstria office REIT AG or generate 55.23% return on investment over 90 days.

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

CapitaLand Investment Limited  vs.  alstria office REIT AG

CapitaLand Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapitaLand Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

alstria office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alstria office REIT AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alstria Office is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CapitaLand Investment and Alstria Office

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

The idea behind CapitaLand Investment Limited and alstria office REIT AG 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.