Correlation Between Din Capital and FPT Securities

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

By analyzing existing cross correlation between Din Capital Investment and FPT Securities JSC, you can compare the effects of market volatilities on Din Capital and FPT Securities 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 Din Capital with a short position of FPT Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Din Capital and FPT Securities.

Diversification Opportunities for Din Capital and FPT Securities

0.06

Correlation Coefficient

Din Capital  FPT Securities

Significant diversification

The 3 months correlation between Din and FPT is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Din Capital Investment and FPT Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Securities JSC and Din 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 Din Capital Investment are associated (or correlated) with FPT Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Securities JSC has no effect on the direction of Din Capital i.e., Din Capital and FPT Securities go up and down completely randomly.

Pair Corralation between Din Capital and FPT Securities

Assuming the 90 days trading horizon Din Capital Investment is expected to generate 1.05 times more return on investment than FPT Securities. However, Din Capital is 1.05 times more volatile than FPT Securities JSC. It trades about 0.14 of its potential returns per unit of risk. FPT Securities JSC is currently generating about -0.06 per unit of risk. If you would invest  900,000  in Din Capital Investment on October 6, 2024 and sell it today you would earn a total of  130,000  from holding Din Capital Investment or generate 14.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Din Capital Investment  vs.  FPT Securities JSC

Din Capital Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Din Capital Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Din Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

FPT Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Din Capital and FPT Securities

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

The idea behind Din Capital Investment and FPT Securities JSC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.