Correlation Between CapitaLand Investment and PennantPark Floating

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

Diversification Opportunities for CapitaLand Investment and PennantPark Floating

-0.62

Correlation Coefficient

CapitaLand Investment  PennantPark Floating

Excellent diversification

The 3 months correlation between CapitaLand and PennantPark is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and PennantPark Floating go up and down completely randomly.

Pair Corralation between CapitaLand Investment and PennantPark Floating

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the PennantPark Floating. In addition to that, CapitaLand Investment is 2.25 times more volatile than PennantPark Floating Rate. It trades about -0.13 of its total potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.12 per unit of volatility. If you would invest  1,056  in PennantPark Floating Rate on December 29, 2024 and sell it today you would earn a total of  72.00  from holding PennantPark Floating Rate or generate 6.82% return on investment over 90 days.

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

CapitaLand Investment Limited  vs.  PennantPark Floating Rate

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.

PennantPark Floating Rate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, PennantPark Floating may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CapitaLand Investment and PennantPark Floating

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

The idea behind CapitaLand Investment Limited and PennantPark Floating Rate 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.

Check out your portfolio center.

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 Directory module to find actively traded commodities issued by global exchanges.