Correlation Between Pekin Life and CapitaLand Investment

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

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

Diversification Opportunities for Pekin Life and CapitaLand Investment

-0.57

Correlation Coefficient

Pekin Life  CapitaLand Investment

Excellent diversification

The 3 months correlation between Pekin and CapitaLand is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Pekin Life 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 Pekin Life Insurance 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 Pekin Life i.e., Pekin Life and CapitaLand Investment go up and down completely randomly.

Pair Corralation between Pekin Life and CapitaLand Investment

Given the investment horizon of 90 days Pekin Life is expected to generate 5.15 times less return on investment than CapitaLand Investment. But when comparing it to its historical volatility, Pekin Life Insurance is 2.65 times less risky than CapitaLand Investment. It trades about 0.01 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  227.00  in CapitaLand Investment Limited on September 25, 2024 and sell it today you would lose (28.00) from holding CapitaLand Investment Limited or give up 12.33% of portfolio value over 90 days.

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

Pekin Life Insurance  vs.  CapitaLand Investment Limited

Pekin Life Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Pekin Life and CapitaLand Investment

The main advantage of trading using opposite Pekin Life and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life 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 Pekin Life Insurance 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.