Correlation Between CapitaLand Investment and ELMOS SEMICONDUCTOR

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

Diversification Opportunities for CapitaLand Investment and ELMOS SEMICONDUCTOR

0.3

Correlation Coefficient

CapitaLand Investment  ELMOS SEMICONDUCTOR

Weak diversification

The 3 months correlation between CapitaLand and ELMOS is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and ELMOS SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELMOS SEMICONDUCTOR has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and ELMOS SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between CapitaLand Investment and ELMOS SEMICONDUCTOR

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the ELMOS SEMICONDUCTOR. But the stock apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 2.08 times less risky than ELMOS SEMICONDUCTOR. The stock trades about -0.04 of its potential returns per unit of risk. The ELMOS SEMICONDUCTOR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,690  in ELMOS SEMICONDUCTOR on September 13, 2024 and sell it today you would lose (20.00) from holding ELMOS SEMICONDUCTOR or give up 0.3% of portfolio value over 90 days.

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

CapitaLand Investment Limited  vs.  ELMOS SEMICONDUCTOR

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 basic indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ELMOS SEMICONDUCTOR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ELMOS SEMICONDUCTOR is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CapitaLand Investment and ELMOS SEMICONDUCTOR

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

The idea behind CapitaLand Investment Limited and ELMOS SEMICONDUCTOR 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.