Correlation Between Sonida Senior and CapitaLand Investment

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

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

Diversification Opportunities for Sonida Senior and CapitaLand Investment

0.22

Correlation Coefficient

Sonida Senior  CapitaLand Investment

Modest diversification

The 3 months correlation between Sonida and CapitaLand is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Sonida Senior 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 Sonida Senior Living 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 Sonida Senior i.e., Sonida Senior and CapitaLand Investment go up and down completely randomly.

Pair Corralation between Sonida Senior and CapitaLand Investment

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 1.11 times more return on investment than CapitaLand Investment. However, Sonida Senior is 1.11 times more volatile than CapitaLand Investment Limited. It trades about 0.0 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  2,621  in Sonida Senior Living on September 12, 2024 and sell it today you would lose (79.00) from holding Sonida Senior Living or give up 3.01% of portfolio value over 90 days.

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

Sonida Senior Living  vs.  CapitaLand Investment Limited

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Sonida Senior is not utilizing all of its potentials. The current stock price disturbance, 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 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.

Pair Trading with Sonida Senior and CapitaLand Investment

The main advantage of trading using opposite Sonida Senior and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior 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 Sonida Senior Living 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.