Correlation Between GUINEA INSURANCE and DEAP CAPITAL

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Can any of the company-specific risk be diversified away by investing in both GUINEA INSURANCE and DEAP 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 GUINEA INSURANCE and DEAP CAPITAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUINEA INSURANCE PLC and DEAP CAPITAL MANAGEMENT, you can compare the effects of market volatilities on GUINEA INSURANCE and DEAP 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 GUINEA INSURANCE with a short position of DEAP CAPITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUINEA INSURANCE and DEAP CAPITAL.

Diversification Opportunities for GUINEA INSURANCE and DEAP CAPITAL

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between GUINEA and DEAP is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GUINEA INSURANCE PLC and DEAP CAPITAL MANAGEMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEAP CAPITAL MANAGEMENT and GUINEA INSURANCE 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 GUINEA INSURANCE PLC are associated (or correlated) with DEAP CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEAP CAPITAL MANAGEMENT has no effect on the direction of GUINEA INSURANCE i.e., GUINEA INSURANCE and DEAP CAPITAL go up and down completely randomly.

Pair Corralation between GUINEA INSURANCE and DEAP CAPITAL

Assuming the 90 days trading horizon GUINEA INSURANCE is expected to generate 3.45 times less return on investment than DEAP CAPITAL. But when comparing it to its historical volatility, GUINEA INSURANCE PLC is 1.39 times less risky than DEAP CAPITAL. It trades about 0.02 of its potential returns per unit of risk. DEAP CAPITAL MANAGEMENT is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  96.00  in DEAP CAPITAL MANAGEMENT on September 2, 2024 and sell it today you would earn a total of  10.00  from holding DEAP CAPITAL MANAGEMENT or generate 10.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

GUINEA INSURANCE PLC  vs.  DEAP CAPITAL MANAGEMENT

 Performance 
       Timeline  
GUINEA INSURANCE PLC 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in GUINEA INSURANCE PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, GUINEA INSURANCE may actually be approaching a critical reversion point that can send shares even higher in January 2025.
DEAP CAPITAL MANAGEMENT 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in DEAP CAPITAL MANAGEMENT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, DEAP CAPITAL reported solid returns over the last few months and may actually be approaching a breakup point.

GUINEA INSURANCE and DEAP CAPITAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GUINEA INSURANCE and DEAP CAPITAL

The main advantage of trading using opposite GUINEA INSURANCE and DEAP CAPITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUINEA INSURANCE position performs unexpectedly, DEAP 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 DEAP CAPITAL will offset losses from the drop in DEAP CAPITAL's long position.
The idea behind GUINEA INSURANCE PLC and DEAP CAPITAL MANAGEMENT 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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