Correlation Between Capital Securities and Inventec Corp

Can any of the company-specific risk be diversified away by investing in both Capital Securities and Inventec Corp 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 Capital Securities and Inventec Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capital Securities Corp and Inventec Corp, you can compare the effects of market volatilities on Capital Securities and Inventec Corp 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 Capital Securities with a short position of Inventec Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Securities and Inventec Corp.

Diversification Opportunities for Capital Securities and Inventec Corp

0.46

Correlation Coefficient

Capital Securities  Inventec Corp

Very weak diversification

The 3 months correlation between Capital and Inventec is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Capital Securities Corp and Inventec Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventec Corp and Capital Securities 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 Capital Securities Corp are associated (or correlated) with Inventec Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventec Corp has no effect on the direction of Capital Securities i.e., Capital Securities and Inventec Corp go up and down completely randomly.

Pair Corralation between Capital Securities and Inventec Corp

Assuming the 90 days trading horizon Capital Securities Corp is expected to generate 0.75 times more return on investment than Inventec Corp. However, Capital Securities Corp is 1.34 times less risky than Inventec Corp. It trades about 0.47 of its potential returns per unit of risk. Inventec Corp is currently generating about -0.01 per unit of risk. If you would invest  2,170  in Capital Securities Corp on September 27, 2024 and sell it today you would earn a total of  330.00  from holding Capital Securities Corp or generate 15.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Capital Securities Corp  vs.  Inventec Corp

Capital Securities Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Securities Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Capital Securities showed solid returns over the last few months and may actually be approaching a breakup point.

Inventec Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inventec Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Inventec Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Securities and Inventec Corp

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

The idea behind Capital Securities Corp and Inventec Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.