Correlation Between Cellnex Telecom and CapitaLand Investment

Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom and CapitaLand Investment 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 Cellnex Telecom and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cellnex Telecom SA and CapitaLand Investment Limited, you can compare the effects of market volatilities on Cellnex Telecom and CapitaLand Investment 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 Cellnex Telecom with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and CapitaLand Investment.

Diversification Opportunities for Cellnex Telecom and CapitaLand Investment

-0.42

Correlation Coefficient

Cellnex Telecom  CapitaLand Investment

Very good diversification

The 3 months correlation between Cellnex and CapitaLand is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and CapitaLand Investment go up and down completely randomly.

Pair Corralation between Cellnex Telecom and CapitaLand Investment

Assuming the 90 days horizon Cellnex Telecom SA is expected to under-perform the CapitaLand Investment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cellnex Telecom SA is 1.75 times less risky than CapitaLand Investment. The pink sheet trades about 0.0 of its potential returns per unit of risk. The CapitaLand Investment Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  243.00  in CapitaLand Investment Limited on December 2, 2024 and sell it today you would lose (76.00) from holding CapitaLand Investment Limited or give up 31.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	65.05%
Values	Daily Returns

Cellnex Telecom SA  vs.  CapitaLand Investment Limited

Cellnex Telecom SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cellnex Telecom is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CapitaLand Investment

Risk-Adjusted Performance

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.

Pair Trading with Cellnex Telecom and CapitaLand Investment

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

The idea behind Cellnex Telecom SA and CapitaLand Investment Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..