Correlation Between Aviat Networks and CapitaLand Investment

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

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

Diversification Opportunities for Aviat Networks and CapitaLand Investment

0.75

Correlation Coefficient

Aviat Networks  CapitaLand Investment

Poor diversification

The 3 months correlation between Aviat and CapitaLand is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aviat Networks and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and Aviat Networks 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 Aviat Networks 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 Aviat Networks i.e., Aviat Networks and CapitaLand Investment go up and down completely randomly.

Pair Corralation between Aviat Networks and CapitaLand Investment

Given the investment horizon of 90 days Aviat Networks is expected to generate 1.34 times less return on investment than CapitaLand Investment. In addition to that, Aviat Networks is 1.36 times more volatile than CapitaLand Investment Limited. It trades about 0.08 of its total potential returns per unit of risk. CapitaLand Investment Limited is currently generating about 0.15 per unit of volatility. If you would invest  182.00  in CapitaLand Investment Limited on May 3, 2025 and sell it today you would earn a total of  27.00  from holding CapitaLand Investment Limited or generate 14.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Aviat Networks  vs.  CapitaLand Investment Limited

Aviat Networks

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aviat Networks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Aviat Networks may actually be approaching a critical reversion point that can send shares even higher in September 2025.

CapitaLand Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CapitaLand Investment Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, CapitaLand Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aviat Networks and CapitaLand Investment

The main advantage of trading using opposite Aviat Networks and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aviat Networks 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 Aviat Networks 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.