Correlation Between Capital Futures and Grand Fortune

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

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

Diversification Opportunities for Capital Futures and Grand Fortune

-0.48

Correlation Coefficient

Capital Futures  Grand Fortune

Very good diversification

The 3 months correlation between Capital and Grand is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Capital Futures Corp and Grand Fortune Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Fortune Securities and Capital Futures 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 Futures Corp are associated (or correlated) with Grand Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Fortune Securities has no effect on the direction of Capital Futures i.e., Capital Futures and Grand Fortune go up and down completely randomly.

Pair Corralation between Capital Futures and Grand Fortune

Assuming the 90 days trading horizon Capital Futures Corp is expected to generate 1.29 times more return on investment than Grand Fortune. However, Capital Futures is 1.29 times more volatile than Grand Fortune Securities. It trades about -0.06 of its potential returns per unit of risk. Grand Fortune Securities is currently generating about -0.31 per unit of risk. If you would invest  5,840  in Capital Futures Corp on September 18, 2024 and sell it today you would lose (80.00) from holding Capital Futures Corp or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Capital Futures Corp  vs.  Grand Fortune Securities

Capital Futures Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Futures Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Capital Futures is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Grand Fortune Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Fortune Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grand Fortune 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 Futures and Grand Fortune

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

The idea behind Capital Futures Corp and Grand Fortune Securities 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.