Correlation Between CapitaLand Investment and Genco Shipping

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

Diversification Opportunities for CapitaLand Investment and Genco Shipping

0.42

Correlation Coefficient

CapitaLand Investment  Genco Shipping

Very weak diversification

The 3 months correlation between CapitaLand and Genco is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Genco Shipping go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Genco Shipping

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Genco Shipping. But the stock apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.42 times less risky than Genco Shipping. The stock trades about -0.05 of its potential returns per unit of risk. The Genco Shipping Trading is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,393  in Genco Shipping Trading on September 1, 2024 and sell it today you would earn a total of  111.00  from holding Genco Shipping Trading or generate 7.97% return on investment over 90 days.

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

CapitaLand Investment Limited  vs.  Genco Shipping Trading

CapitaLand Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CapitaLand Investment Limited are ranked lower than 3 (%) 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.

Genco Shipping Trading

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CapitaLand Investment and Genco Shipping

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

The idea behind CapitaLand Investment Limited and Genco Shipping Trading 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.