Correlation Between CapitaLand Investment and Markel

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

Diversification Opportunities for CapitaLand Investment and Markel

-0.15

Correlation Coefficient

CapitaLand Investment  Markel

Good diversification

The 3 months correlation between CapitaLand and Markel is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel 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 Markel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Markel go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Markel

Assuming the 90 days horizon CapitaLand Investment is expected to generate 1.51 times less return on investment than Markel. But when comparing it to its historical volatility, CapitaLand Investment Limited is 1.01 times less risky than Markel. It trades about 0.03 of its potential returns per unit of risk. Markel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  166,000  in Markel on December 30, 2024 and sell it today you would earn a total of  7,800  from holding Markel or generate 4.7% 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.  Markel

CapitaLand Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CapitaLand Investment Limited are ranked lower than 2 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Markel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Markel 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 Markel

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

The idea behind CapitaLand Investment Limited and Markel 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.