Correlation Between Capri Holdings and Rapac Communication

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

By analyzing existing cross correlation between Capri Holdings and Rapac Communication Infrastructure, you can compare the effects of market volatilities on Capri Holdings and Rapac Communication 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 Rapac Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Rapac Communication.

Diversification Opportunities for Capri Holdings and Rapac Communication

0.38

Correlation Coefficient

Capri Holdings  Rapac Communication

Weak diversification

The 3 months correlation between Capri and Rapac is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Rapac Communication Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapac Communication 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 Rapac Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapac Communication has no effect on the direction of Capri Holdings i.e., Capri Holdings and Rapac Communication go up and down completely randomly.

Pair Corralation between Capri Holdings and Rapac Communication

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Rapac Communication. In addition to that, Capri Holdings is 1.31 times more volatile than Rapac Communication Infrastructure. It trades about -0.07 of its total potential returns per unit of risk. Rapac Communication Infrastructure is currently generating about 0.37 per unit of volatility. If you would invest  250,000  in Rapac Communication Infrastructure on November 28, 2024 and sell it today you would earn a total of  127,900  from holding Rapac Communication Infrastructure or generate 51.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.21%
Values	Daily Returns

Capri Holdings  vs.  Rapac Communication Infrastruc

Capri Holdings

Risk-Adjusted Performance

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 March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Rapac Communication

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Rapac Communication Infrastructure are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rapac Communication sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capri Holdings and Rapac Communication

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

The idea behind Capri Holdings and Rapac Communication Infrastructure 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.