Correlation Between Associated Capital and Old Market

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

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

Diversification Opportunities for Associated Capital and Old Market

-0.25

Correlation Coefficient

Associated Capital  Old Market

Very good diversification

The 3 months correlation between Associated and Old is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Old Market Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Market Capital and Associated Capital 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 Associated Capital Group are associated (or correlated) with Old Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Market Capital has no effect on the direction of Associated Capital i.e., Associated Capital and Old Market go up and down completely randomly.

Pair Corralation between Associated Capital and Old Market

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 2.73 times less return on investment than Old Market. But when comparing it to its historical volatility, Associated Capital Group is 1.54 times less risky than Old Market. It trades about 0.12 of its potential returns per unit of risk. Old Market Capital is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  603.00  in Old Market Capital on October 20, 2024 and sell it today you would earn a total of  57.00  from holding Old Market Capital or generate 9.45% return on investment over 90 days.

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

Associated Capital Group  vs.  Old Market Capital

Associated Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Old Market Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Old Market Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Old Market may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Associated Capital and Old Market

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

The idea behind Associated Capital Group and Old Market Capital 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.