Correlation Between DEAP CAPITAL and NPF MICRO

Can any of the company-specific risk be diversified away by investing in both DEAP CAPITAL and NPF MICRO 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 NPF MICRO 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 NPF MICRO FINANCE, you can compare the effects of market volatilities on DEAP CAPITAL and NPF MICRO 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 NPF MICRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEAP CAPITAL and NPF MICRO.

Diversification Opportunities for DEAP CAPITAL and NPF MICRO

-0.01

Correlation Coefficient

DEAP CAPITAL  NPF MICRO

Good diversification

The 3 months correlation between DEAP and NPF is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding DEAP CAPITAL MANAGEMENT and NPF MICRO FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NPF MICRO FINANCE 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 NPF MICRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NPF MICRO FINANCE has no effect on the direction of DEAP CAPITAL i.e., DEAP CAPITAL and NPF MICRO go up and down completely randomly.

Pair Corralation between DEAP CAPITAL and NPF MICRO

Assuming the 90 days trading horizon DEAP CAPITAL MANAGEMENT is expected to under-perform the NPF MICRO. In addition to that, DEAP CAPITAL is 1.35 times more volatile than NPF MICRO FINANCE. It trades about -0.02 of its total potential returns per unit of risk. NPF MICRO FINANCE is currently generating about 0.11 per unit of volatility. If you would invest  157.00  in NPF MICRO FINANCE on November 29, 2024 and sell it today you would earn a total of  27.00  from holding NPF MICRO FINANCE or generate 17.2% return on investment over 90 days.

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

DEAP CAPITAL MANAGEMENT  vs.  NPF MICRO FINANCE

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 relatively invariable basic indicators, DEAP CAPITAL is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

NPF MICRO FINANCE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NPF MICRO FINANCE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, NPF MICRO reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DEAP CAPITAL and NPF MICRO

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

The idea behind DEAP CAPITAL MANAGEMENT and NPF MICRO FINANCE 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.