Correlation Between CapitaLand Investment and Empire State

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

Diversification Opportunities for CapitaLand Investment and Empire State

0.2

Correlation Coefficient

CapitaLand Investment  Empire State

Modest diversification

The 3 months correlation between CapitaLand and Empire is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty 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 Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Empire State go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Empire State

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Empire State. In addition to that, CapitaLand Investment is 1.01 times more volatile than Empire State Realty. It trades about -0.09 of its total potential returns per unit of risk. Empire State Realty is currently generating about -0.02 per unit of volatility. If you would invest  1,066  in Empire State Realty on October 7, 2024 and sell it today you would lose (49.00) from holding Empire State Realty or give up 4.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

CapitaLand Investment Limited  vs.  Empire State Realty

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 essential 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.

Empire State Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empire State Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Empire State is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CapitaLand Investment and Empire State

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

The idea behind CapitaLand Investment Limited and Empire State Realty 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.