Correlation Between GE Vernova and CapitaLand Investment

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

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

Diversification Opportunities for GE Vernova and CapitaLand Investment

0.37

Correlation Coefficient

GE Vernova  CapitaLand Investment

Weak diversification

The 3 months correlation between GEV and CapitaLand is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and GE Vernova 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 GE Vernova LLC 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 GE Vernova i.e., GE Vernova and CapitaLand Investment go up and down completely randomly.

Pair Corralation between GE Vernova and CapitaLand Investment

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 0.88 times more return on investment than CapitaLand Investment. However, GE Vernova LLC is 1.13 times less risky than CapitaLand Investment. It trades about -0.15 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.22 per unit of risk. If you would invest  37,288  in GE Vernova LLC on December 2, 2024 and sell it today you would lose (3,770) from holding GE Vernova LLC or give up 10.11% of portfolio value over 90 days.

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

GE Vernova LLC  vs.  CapitaLand Investment Limited

GE Vernova LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 GE Vernova and CapitaLand Investment

The main advantage of trading using opposite GE Vernova and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Vernova 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 GE Vernova LLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.