Correlation Between CapitaLand Investment and Lakeside Holding

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

Diversification Opportunities for CapitaLand Investment and Lakeside Holding

0.33

Correlation Coefficient

CapitaLand Investment  Lakeside Holding

Weak diversification

The 3 months correlation between CapitaLand and Lakeside is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Lakeside Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeside Holding 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 Lakeside Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeside Holding has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Lakeside Holding go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Lakeside Holding

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Lakeside Holding. But the pink sheet apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 3.83 times less risky than Lakeside Holding. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Lakeside Holding Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  299.00  in Lakeside Holding Limited on September 13, 2024 and sell it today you would lose (36.00) from holding Lakeside Holding Limited or give up 12.04% 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.  Lakeside Holding Limited

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lakeside Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeside Holding Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Lakeside Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapitaLand Investment and Lakeside Holding

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

The idea behind CapitaLand Investment Limited and Lakeside Holding 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.