Correlation Between Rackspace Technology and CapitaLand Investment

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

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

Diversification Opportunities for Rackspace Technology and CapitaLand Investment

-0.1

Correlation Coefficient

Rackspace Technology  CapitaLand Investment

Good diversification

The 3 months correlation between Rackspace and CapitaLand is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Rackspace Technology and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Rackspace Technology 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 Rackspace Technology 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 Rackspace Technology i.e., Rackspace Technology and CapitaLand Investment go up and down completely randomly.

Pair Corralation between Rackspace Technology and CapitaLand Investment

Considering the 90-day investment horizon Rackspace Technology is expected to generate 1.5 times more return on investment than CapitaLand Investment. However, Rackspace Technology is 1.5 times more volatile than CapitaLand Investment Limited. It trades about 0.01 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.01 per unit of risk. If you would invest  250.00  in Rackspace Technology on September 17, 2024 and sell it today you would lose (10.00) from holding Rackspace Technology or give up 4.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Rackspace Technology  vs.  CapitaLand Investment Limited

Rackspace Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rackspace Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rackspace Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private 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 nearly stable essential indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Rackspace Technology and CapitaLand Investment

The main advantage of trading using opposite Rackspace Technology and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rackspace Technology 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 Rackspace Technology 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.