Correlation Between CapitaLand Investment and Pekin Life

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

Diversification Opportunities for CapitaLand Investment and Pekin Life

-0.57

Correlation Coefficient

CapitaLand Investment  Pekin Life

Excellent diversification

The 3 months correlation between CapitaLand and Pekin is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Pekin Life go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Pekin Life

Assuming the 90 days horizon CapitaLand Investment Limited is expected to generate 2.64 times more return on investment than Pekin Life. However, CapitaLand Investment is 2.64 times more volatile than Pekin Life Insurance. It trades about 0.02 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.01 per unit of risk. If you would invest  227.00  in CapitaLand Investment Limited on September 20, 2024 and sell it today you would lose (28.00) from holding CapitaLand Investment Limited or give up 12.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

CapitaLand Investment Limited  vs.  Pekin Life Insurance

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.

Pekin Life Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CapitaLand Investment and Pekin Life

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

The idea behind CapitaLand Investment Limited and Pekin Life Insurance 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.