Correlation Between Rand Capital and Capital Clean

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

By analyzing existing cross correlation between Rand Capital Corp and Capital Clean Energy, you can compare the effects of market volatilities on Rand Capital and Capital Clean 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 Rand Capital with a short position of Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and Capital Clean.

Diversification Opportunities for Rand Capital and Capital Clean

-0.09

Correlation Coefficient

Rand Capital  Capital Clean

Good diversification

The 3 months correlation between Rand and Capital is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and Rand 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 Rand Capital Corp are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Rand Capital i.e., Rand Capital and Capital Clean go up and down completely randomly.

Pair Corralation between Rand Capital and Capital Clean

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 1.23 times more return on investment than Capital Clean. However, Rand Capital is 1.23 times more volatile than Capital Clean Energy. It trades about 0.17 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.05 per unit of risk. If you would invest  1,618  in Rand Capital Corp on September 13, 2024 and sell it today you would earn a total of  490.00  from holding Rand Capital Corp or generate 30.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Rand Capital Corp  vs.  Capital Clean Energy

Rand Capital Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Capital Clean Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Clean Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Capital Clean may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rand Capital and Capital Clean

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

The idea behind Rand Capital Corp and Capital Clean Energy 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.