Correlation Between CHAMPION BREWERIES and DEAP CAPITAL

Can any of the company-specific risk be diversified away by investing in both CHAMPION BREWERIES and DEAP 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 CHAMPION BREWERIES and DEAP CAPITAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHAMPION BREWERIES PLC and DEAP CAPITAL MANAGEMENT, you can compare the effects of market volatilities on CHAMPION BREWERIES and DEAP 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 CHAMPION BREWERIES with a short position of DEAP CAPITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAMPION BREWERIES and DEAP CAPITAL.

Diversification Opportunities for CHAMPION BREWERIES and DEAP CAPITAL

-0.08

Correlation Coefficient

CHAMPION BREWERIES  DEAP CAPITAL

Good diversification

The 3 months correlation between CHAMPION and DEAP is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION BREWERIES PLC and DEAP CAPITAL MANAGEMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEAP CAPITAL MANAGEMENT and CHAMPION BREWERIES 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 CHAMPION BREWERIES PLC are associated (or correlated) with DEAP CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEAP CAPITAL MANAGEMENT has no effect on the direction of CHAMPION BREWERIES i.e., CHAMPION BREWERIES and DEAP CAPITAL go up and down completely randomly.

Pair Corralation between CHAMPION BREWERIES and DEAP CAPITAL

Assuming the 90 days trading horizon CHAMPION BREWERIES PLC is expected to generate 0.77 times more return on investment than DEAP CAPITAL. However, CHAMPION BREWERIES PLC is 1.3 times less risky than DEAP CAPITAL. It trades about 0.08 of its potential returns per unit of risk. DEAP CAPITAL MANAGEMENT is currently generating about -0.05 per unit of risk. If you would invest  350.00  in CHAMPION BREWERIES PLC on October 24, 2024 and sell it today you would earn a total of  43.00  from holding CHAMPION BREWERIES PLC or generate 12.29% return on investment over 90 days.

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

CHAMPION BREWERIES PLC  vs.  DEAP CAPITAL MANAGEMENT

CHAMPION BREWERIES PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHAMPION BREWERIES PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, CHAMPION BREWERIES displayed solid returns over the last few months and may actually be approaching a breakup point.

DEAP CAPITAL MANAGEMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEAP CAPITAL MANAGEMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CHAMPION BREWERIES and DEAP CAPITAL

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

The idea behind CHAMPION BREWERIES PLC and DEAP CAPITAL MANAGEMENT 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.