Correlation Between Adgar Investments and Direct Capital

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

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

Diversification Opportunities for Adgar Investments and Direct Capital

0.49

Correlation Coefficient

Adgar Investments  Direct Capital

Very weak diversification

The 3 months correlation between Adgar and Direct is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Adgar Investments and and Direct Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Capital Inves and Adgar Investments 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 Adgar Investments and are associated (or correlated) with Direct Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Capital Inves has no effect on the direction of Adgar Investments i.e., Adgar Investments and Direct Capital go up and down completely randomly.

Pair Corralation between Adgar Investments and Direct Capital

Assuming the 90 days trading horizon Adgar Investments and is expected to generate 0.23 times more return on investment than Direct Capital. However, Adgar Investments and is 4.35 times less risky than Direct Capital. It trades about -0.26 of its potential returns per unit of risk. Direct Capital Investments is currently generating about -0.1 per unit of risk. If you would invest  58,030  in Adgar Investments and on December 21, 2024 and sell it today you would lose (9,970) from holding Adgar Investments and or give up 17.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.08%
Values	Daily Returns

Adgar Investments and  vs.  Direct Capital Investments

Adgar Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adgar Investments and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Direct Capital Inves

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direct Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Adgar Investments and Direct Capital

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

The idea behind Adgar Investments and and Direct Capital Investments 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.