Correlation Between CapitaLand Investment and Rackspace Technology

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

Diversification Opportunities for CapitaLand Investment and Rackspace Technology

-0.1

Correlation Coefficient

CapitaLand Investment  Rackspace Technology

Good diversification

The 3 months correlation between CapitaLand and Rackspace is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology 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 Rackspace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackspace Technology has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Rackspace Technology go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Rackspace Technology

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Rackspace Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.51 times less risky than Rackspace Technology. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Rackspace Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Rackspace Technology on September 17, 2024 and sell it today you would lose (8.00) from holding Rackspace Technology or give up 3.2% of portfolio value over 90 days.

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

CapitaLand Investment Limited  vs.  Rackspace Technology

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 nearly stable essential indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Rackspace Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rackspace Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rackspace Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CapitaLand Investment and Rackspace Technology

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

The idea behind CapitaLand Investment Limited and Rackspace Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.