Correlation Between Equus Total and Highest Performances

Can any of the company-specific risk be diversified away by investing in both Equus Total and Highest Performances 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 Equus Total and Highest Performances into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Equus Total Return and Highest Performances Holdings, you can compare the effects of market volatilities on Equus Total and Highest Performances 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 Equus Total with a short position of Highest Performances. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equus Total and Highest Performances.

Diversification Opportunities for Equus Total and Highest Performances

-0.1

Correlation Coefficient

Equus Total  Highest Performances

Good diversification

The 3 months correlation between Equus and Highest is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Equus Total Return and Highest Performances Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highest Performances and Equus Total 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 Equus Total Return are associated (or correlated) with Highest Performances. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highest Performances has no effect on the direction of Equus Total i.e., Equus Total and Highest Performances go up and down completely randomly.

Pair Corralation between Equus Total and Highest Performances

Considering the 90-day investment horizon Equus Total Return is expected to generate 0.48 times more return on investment than Highest Performances. However, Equus Total Return is 2.07 times less risky than Highest Performances. It trades about 0.02 of its potential returns per unit of risk. Highest Performances Holdings is currently generating about -0.1 per unit of risk. If you would invest  108.00  in Equus Total Return on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Equus Total Return or generate 0.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Equus Total Return  vs.  Highest Performances Holdings

Equus Total Return

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equus Total Return are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Equus Total may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Highest Performances

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highest Performances Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Equus Total and Highest Performances

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

The idea behind Equus Total Return and Highest Performances Holdings 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.