Correlation Between CT Real and First Capital

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

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

Diversification Opportunities for CT Real and First Capital

0.93

Correlation Coefficient

CT Real  First Capital

Almost no diversification

The 3 months correlation between CRT-UN and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding CT Real Estate 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 CT Real 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 CT Real Estate 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 CT Real i.e., CT Real and First Capital go up and down completely randomly.

Pair Corralation between CT Real and First Capital

Assuming the 90 days trading horizon CT Real is expected to generate 4.81 times less return on investment than First Capital. But when comparing it to its historical volatility, CT Real Estate is 1.11 times less risky than First Capital. It trades about 0.01 of its potential returns per unit of risk. First Capital Real is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,419  in First Capital Real on September 25, 2024 and sell it today you would earn a total of  274.00  from holding First Capital Real or generate 19.31% return on investment over 90 days.

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

CT Real Estate  vs.  First Capital Real

CT Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CT Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CT Real and First Capital

The main advantage of trading using opposite CT Real and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CT Real 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 CT Real Estate 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 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.