Correlation Between CapitaLand Investment and Sphere Entertainment

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

Diversification Opportunities for CapitaLand Investment and Sphere Entertainment

0.66

Correlation Coefficient

CapitaLand Investment  Sphere Entertainment

Poor diversification

The 3 months correlation between CapitaLand and Sphere is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Sphere Entertainment go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Sphere Entertainment

Assuming the 90 days horizon CapitaLand Investment Limited is expected to generate 0.93 times more return on investment than Sphere Entertainment. However, CapitaLand Investment Limited is 1.08 times less risky than Sphere Entertainment. It trades about 0.19 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.1 per unit of risk. If you would invest  182.00  in CapitaLand Investment Limited on October 5, 2024 and sell it today you would earn a total of  17.00  from holding CapitaLand Investment Limited or generate 9.34% return on investment over 90 days.

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

CapitaLand Investment Limited  vs.  Sphere Entertainment Co

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.

Sphere Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CapitaLand Investment and Sphere Entertainment

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

The idea behind CapitaLand Investment Limited and Sphere Entertainment Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.