Correlation Between CapitaLand Investment and Royal Bank

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

Diversification Opportunities for CapitaLand Investment and Royal Bank

-0.25

Correlation Coefficient

CapitaLand Investment  Royal Bank

Very good diversification

The 3 months correlation between CapitaLand and Royal is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank 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 Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Royal Bank go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Royal Bank

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Royal Bank. In addition to that, CapitaLand Investment is 2.65 times more volatile than Royal Bank of. It trades about -0.09 of its total potential returns per unit of risk. Royal Bank of is currently generating about 0.0 per unit of volatility. If you would invest  12,076  in Royal Bank of on October 7, 2024 and sell it today you would lose (33.00) from holding Royal Bank of or give up 0.27% 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.  Royal Bank of

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 uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Royal Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Royal Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CapitaLand Investment and Royal Bank

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

The idea behind CapitaLand Investment Limited and Royal Bank of 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.