Correlation Between CapitaLand Investment and Vodka Brands

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

Diversification Opportunities for CapitaLand Investment and Vodka Brands

-0.22

Correlation Coefficient

CapitaLand Investment  Vodka Brands

Very good diversification

The 3 months correlation between CapitaLand and Vodka is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp 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 Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Vodka Brands go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Vodka Brands

Assuming the 90 days horizon CapitaLand Investment is expected to generate 3.37 times less return on investment than Vodka Brands. But when comparing it to its historical volatility, CapitaLand Investment Limited is 1.87 times less risky than Vodka Brands. It trades about 0.02 of its potential returns per unit of risk. Vodka Brands Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  177.00  in Vodka Brands Corp on September 23, 2024 and sell it today you would lose (70.00) from holding Vodka Brands Corp or give up 39.55% of portfolio value over 90 days.

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

CapitaLand Investment Limited  vs.  Vodka Brands Corp

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vodka Brands Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vodka Brands Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CapitaLand Investment and Vodka Brands

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

The idea behind CapitaLand Investment Limited and Vodka Brands Corp 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.