Correlation Between CapitaLand Investment and Suburban Propane

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

Diversification Opportunities for CapitaLand Investment and Suburban Propane

-0.37

Correlation Coefficient

CapitaLand Investment  Suburban Propane

Very good diversification

The 3 months correlation between CapitaLand and Suburban is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners 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 Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Suburban Propane go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Suburban Propane

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Suburban Propane. In addition to that, CapitaLand Investment is 1.37 times more volatile than Suburban Propane Partners. It trades about -0.07 of its total potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.13 per unit of volatility. If you would invest  1,718  in Suburban Propane Partners on September 4, 2024 and sell it today you would earn a total of  243.00  from holding Suburban Propane Partners or generate 14.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CapitaLand Investment Limited  vs.  Suburban Propane Partners

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 uncertain 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.

Suburban Propane Partners

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Suburban Propane demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapitaLand Investment and Suburban Propane

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

The idea behind CapitaLand Investment Limited and Suburban Propane Partners 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.