Correlation Between Bridgemarq Real and CapitaLand Investment

Can any of the company-specific risk be diversified away by investing in both Bridgemarq Real and CapitaLand Investment 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 Bridgemarq Real and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bridgemarq Real Estate and CapitaLand Investment Limited, you can compare the effects of market volatilities on Bridgemarq Real and CapitaLand Investment 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 Bridgemarq Real with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgemarq Real and CapitaLand Investment.

Diversification Opportunities for Bridgemarq Real and CapitaLand Investment

-0.55

Correlation Coefficient

Bridgemarq Real  CapitaLand Investment

Excellent diversification

The 3 months correlation between Bridgemarq and CapitaLand is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bridgemarq Real Estate and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Bridgemarq Real 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 Bridgemarq Real Estate are associated (or correlated) with CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of Bridgemarq Real i.e., Bridgemarq Real and CapitaLand Investment go up and down completely randomly.

Pair Corralation between Bridgemarq Real and CapitaLand Investment

Assuming the 90 days horizon Bridgemarq Real Estate is expected to generate 0.38 times more return on investment than CapitaLand Investment. However, Bridgemarq Real Estate is 2.6 times less risky than CapitaLand Investment. It trades about 0.08 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about 0.03 per unit of risk. If you would invest  781.00  in Bridgemarq Real Estate on September 14, 2024 and sell it today you would earn a total of  266.00  from holding Bridgemarq Real Estate or generate 34.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.87%
Values	Daily Returns

Bridgemarq Real Estate  vs.  CapitaLand Investment Limited

Bridgemarq Real Estate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgemarq Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Bridgemarq Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 nearly stable essential indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bridgemarq Real and CapitaLand Investment

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

The idea behind Bridgemarq Real Estate and CapitaLand Investment Limited 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.