Correlation Between CapitaLand Investment and BOSTON BEER

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

Diversification Opportunities for CapitaLand Investment and BOSTON BEER

-0.53

Correlation Coefficient

CapitaLand Investment  BOSTON BEER

Excellent diversification

The 3 months correlation between CapitaLand and BOSTON is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A 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 BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and BOSTON BEER go up and down completely randomly.

Pair Corralation between CapitaLand Investment and BOSTON BEER

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the BOSTON BEER. But the stock apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.36 times less risky than BOSTON BEER. The stock trades about -0.13 of its potential returns per unit of risk. The BOSTON BEER A is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  26,960  in BOSTON BEER A on October 6, 2024 and sell it today you would earn a total of  2,020  from holding BOSTON BEER A or generate 7.49% return on investment over 90 days.

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

CapitaLand Investment Limited  vs.  BOSTON BEER A

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.

BOSTON BEER A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, BOSTON BEER exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapitaLand Investment and BOSTON BEER

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

The idea behind CapitaLand Investment Limited and BOSTON BEER A 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.