Correlation Between Capital Securities and Concord Securities

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

Diversification Opportunities for Capital Securities and Concord Securities

-0.42

Correlation Coefficient

Capital Securities  Concord Securities

Very good diversification

The 3 months correlation between Capital and Concord is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Capital Securities Corp and Concord Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Securities 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 Concord Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Securities has no effect on the direction of Capital Securities i.e., Capital Securities and Concord Securities go up and down completely randomly.

Pair Corralation between Capital Securities and Concord Securities

Assuming the 90 days trading horizon Capital Securities Corp is expected to under-perform the Concord Securities. But the stock apears to be less risky and, when comparing its historical volatility, Capital Securities Corp is 1.41 times less risky than Concord Securities. The stock trades about 0.0 of its potential returns per unit of risk. The Concord Securities Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,424  in Concord Securities Co on September 18, 2024 and sell it today you would lose (79.00) from holding Concord Securities Co or give up 5.55% of portfolio value over 90 days.

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

Capital Securities Corp  vs.  Concord Securities Co

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.

Concord Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Concord Securities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Capital Securities and Concord Securities

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

The idea behind Capital Securities Corp and Concord Securities Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.