Correlation Between CapitaLand Investment and Kinsale Capital

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

Diversification Opportunities for CapitaLand Investment and Kinsale Capital

-0.33

Correlation Coefficient

CapitaLand Investment  Kinsale Capital

Very good diversification

The 3 months correlation between CapitaLand and Kinsale is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group 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 Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Kinsale Capital go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Kinsale Capital

Assuming the 90 days horizon CapitaLand Investment is expected to generate 2.02 times less return on investment than Kinsale Capital. In addition to that, CapitaLand Investment is 1.81 times more volatile than Kinsale Capital Group. It trades about 0.02 of its total potential returns per unit of risk. Kinsale Capital Group is currently generating about 0.06 per unit of volatility. If you would invest  26,076  in Kinsale Capital Group on September 20, 2024 and sell it today you would earn a total of  20,672  from holding Kinsale Capital Group or generate 79.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CapitaLand Investment Limited  vs.  Kinsale Capital Group

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 weak 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.

Kinsale Capital Group

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CapitaLand Investment and Kinsale Capital

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

The idea behind CapitaLand Investment Limited and Kinsale Capital Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.