Correlation Between Capri Holdings and Foreign Trade

Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Foreign Trade 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 Capri Holdings and Foreign Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capri Holdings and Foreign Trade Bank, you can compare the effects of market volatilities on Capri Holdings and Foreign Trade 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 Capri Holdings with a short position of Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Foreign Trade.

Diversification Opportunities for Capri Holdings and Foreign Trade

-0.47

Correlation Coefficient

Capri Holdings  Foreign Trade

Very good diversification

The 3 months correlation between Capri and Foreign is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Foreign Trade Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Bank and Capri Holdings 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 Capri Holdings are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Bank has no effect on the direction of Capri Holdings i.e., Capri Holdings and Foreign Trade go up and down completely randomly.

Pair Corralation between Capri Holdings and Foreign Trade

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Foreign Trade. In addition to that, Capri Holdings is 4.78 times more volatile than Foreign Trade Bank. It trades about -0.05 of its total potential returns per unit of risk. Foreign Trade Bank is currently generating about 0.09 per unit of volatility. If you would invest  3,089  in Foreign Trade Bank on August 30, 2024 and sell it today you would earn a total of  248.00  from holding Foreign Trade Bank or generate 8.03% return on investment over 90 days.

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

Capri Holdings  vs.  Foreign Trade Bank

Capri Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capri Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Foreign Trade Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Trade Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Foreign Trade may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Capri Holdings and Foreign Trade

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

The idea behind Capri Holdings and Foreign Trade Bank 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 Commodity Directory module to find actively traded commodities issued by global exchanges.