Correlation Between CapitaLand Investment and SOLSTAD OFFSHORE

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

Diversification Opportunities for CapitaLand Investment and SOLSTAD OFFSHORE

-0.58

Correlation Coefficient

CapitaLand Investment  SOLSTAD OFFSHORE

Excellent diversification

The 3 months correlation between CapitaLand and SOLSTAD is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLSTAD OFFSHORE has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and SOLSTAD OFFSHORE go up and down completely randomly.

Pair Corralation between CapitaLand Investment and SOLSTAD OFFSHORE

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the SOLSTAD OFFSHORE. But the stock apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 2.68 times less risky than SOLSTAD OFFSHORE. The stock trades about -0.02 of its potential returns per unit of risk. The SOLSTAD OFFSHORE NK is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  372.00  in SOLSTAD OFFSHORE NK on October 5, 2024 and sell it today you would lose (41.00) from holding SOLSTAD OFFSHORE NK or give up 11.02% of portfolio value over 90 days.

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

CapitaLand Investment Limited  vs.  SOLSTAD OFFSHORE NK

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 uncertain 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.

SOLSTAD OFFSHORE

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days SOLSTAD OFFSHORE NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, SOLSTAD OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapitaLand Investment and SOLSTAD OFFSHORE

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

The idea behind CapitaLand Investment Limited and SOLSTAD OFFSHORE NK 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.