Correlation Between CapitaLand Investment and IRSA Inversiones

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

Diversification Opportunities for CapitaLand Investment and IRSA Inversiones

0.73

Correlation Coefficient

CapitaLand Investment  IRSA Inversiones

Poor diversification

The 3 months correlation between CapitaLand and IRSA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and IRSA Inversiones Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRSA Inversiones Y 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 IRSA Inversiones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRSA Inversiones Y has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and IRSA Inversiones go up and down completely randomly.

Pair Corralation between CapitaLand Investment and IRSA Inversiones

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the IRSA Inversiones. But the pink sheet apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.45 times less risky than IRSA Inversiones. The pink sheet trades about -0.13 of its potential returns per unit of risk. The IRSA Inversiones Y is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,560  in IRSA Inversiones Y on December 26, 2024 and sell it today you would lose (207.00) from holding IRSA Inversiones Y or give up 13.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

CapitaLand Investment Limited  vs.  IRSA Inversiones Y

CapitaLand Investment

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

IRSA Inversiones Y

Risk-Adjusted Performance

Very Weak

Over the last 90 days IRSA Inversiones Y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CapitaLand Investment and IRSA Inversiones

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

The idea behind CapitaLand Investment Limited and IRSA Inversiones Y 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.