Correlation Between CapitaLand Investment and Bridgford Foods

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

Diversification Opportunities for CapitaLand Investment and Bridgford Foods

0.03

Correlation Coefficient

CapitaLand Investment  Bridgford Foods

Significant diversification

The 3 months correlation between CapitaLand and Bridgford is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods 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 Bridgford Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgford Foods has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Bridgford Foods go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Bridgford Foods

Assuming the 90 days horizon CapitaLand Investment Limited is expected to generate 1.89 times more return on investment than Bridgford Foods. However, CapitaLand Investment is 1.89 times more volatile than Bridgford Foods. It trades about 0.01 of its potential returns per unit of risk. Bridgford Foods is currently generating about 0.0 per unit of risk. If you would invest  258.00  in CapitaLand Investment Limited on October 22, 2024 and sell it today you would lose (59.00) from holding CapitaLand Investment Limited or give up 22.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

CapitaLand Investment Limited  vs.  Bridgford Foods

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 latest uncertain performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Bridgford Foods

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with CapitaLand Investment and Bridgford Foods

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

The idea behind CapitaLand Investment Limited and Bridgford Foods 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.