Correlation Between CapitaLand Investment and Goldenstone Acquisition

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

Diversification Opportunities for CapitaLand Investment and Goldenstone Acquisition

0.31

Correlation Coefficient

CapitaLand Investment  Goldenstone Acquisition

Weak diversification

The 3 months correlation between CapitaLand and Goldenstone is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Goldenstone Acquisition Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldenstone Acquisition 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 Goldenstone Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldenstone Acquisition has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Goldenstone Acquisition go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Goldenstone Acquisition

Assuming the 90 days horizon CapitaLand Investment is expected to generate 405.74 times less return on investment than Goldenstone Acquisition. But when comparing it to its historical volatility, CapitaLand Investment Limited is 32.19 times less risky than Goldenstone Acquisition. It trades about 0.01 of its potential returns per unit of risk. Goldenstone Acquisition Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Goldenstone Acquisition Limited on October 4, 2024 and sell it today you would earn a total of  2.00  from holding Goldenstone Acquisition Limited or generate 200.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	39.8%
Values	Daily Returns

CapitaLand Investment Limited  vs.  Goldenstone Acquisition Limite

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.

Goldenstone Acquisition

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Goldenstone Acquisition Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Goldenstone Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapitaLand Investment and Goldenstone Acquisition

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

The idea behind CapitaLand Investment Limited and Goldenstone Acquisition 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 CEOs Directory module to screen CEOs from public companies around the world.