Correlation Between Allied Properties and First Capital

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

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

Diversification Opportunities for Allied Properties and First Capital

0.58

Correlation Coefficient

Allied Properties  First Capital

Very weak diversification

The 3 months correlation between Allied and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Allied Properties Real and First Capital Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital Real and Allied Properties 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 Allied Properties Real are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital Real has no effect on the direction of Allied Properties i.e., Allied Properties and First Capital go up and down completely randomly.

Pair Corralation between Allied Properties and First Capital

Assuming the 90 days trading horizon Allied Properties Real is expected to generate 1.73 times more return on investment than First Capital. However, Allied Properties is 1.73 times more volatile than First Capital Real. It trades about 0.06 of its potential returns per unit of risk. First Capital Real is currently generating about 0.0 per unit of risk. If you would invest  1,714  in Allied Properties Real on September 4, 2024 and sell it today you would earn a total of  80.00  from holding Allied Properties Real or generate 4.67% return on investment over 90 days.

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

Allied Properties Real  vs.  First Capital Real

Allied Properties Real

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Properties Real are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Allied Properties is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

First Capital Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Capital Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, First Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allied Properties and First Capital

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

The idea behind Allied Properties Real and First Capital Real 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.