Correlation Between DEAP CAPITAL and CHAMPION BREWERIES

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

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

Diversification Opportunities for DEAP CAPITAL and CHAMPION BREWERIES

0.46

Correlation Coefficient

DEAP CAPITAL  CHAMPION BREWERIES

Very weak diversification

The 3 months correlation between DEAP and CHAMPION is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding DEAP CAPITAL MANAGEMENT and CHAMPION BREWERIES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAMPION BREWERIES PLC and DEAP CAPITAL 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 DEAP CAPITAL MANAGEMENT are associated (or correlated) with CHAMPION BREWERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAMPION BREWERIES PLC has no effect on the direction of DEAP CAPITAL i.e., DEAP CAPITAL and CHAMPION BREWERIES go up and down completely randomly.

Pair Corralation between DEAP CAPITAL and CHAMPION BREWERIES

Assuming the 90 days trading horizon DEAP CAPITAL MANAGEMENT is expected to under-perform the CHAMPION BREWERIES. In addition to that, DEAP CAPITAL is 1.05 times more volatile than CHAMPION BREWERIES PLC. It trades about -0.07 of its total potential returns per unit of risk. CHAMPION BREWERIES PLC is currently generating about -0.02 per unit of volatility. If you would invest  418.00  in CHAMPION BREWERIES PLC on December 27, 2024 and sell it today you would lose (38.00) from holding CHAMPION BREWERIES PLC or give up 9.09% of portfolio value over 90 days.

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

DEAP CAPITAL MANAGEMENT  vs.  CHAMPION BREWERIES PLC

DEAP CAPITAL MANAGEMENT

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

CHAMPION BREWERIES PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHAMPION BREWERIES PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CHAMPION BREWERIES is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DEAP CAPITAL and CHAMPION BREWERIES

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

The idea behind DEAP CAPITAL MANAGEMENT and CHAMPION BREWERIES PLC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.