Correlation Between Rand Capital and Equus Total

Can any of the company-specific risk be diversified away by investing in both Rand Capital and Equus Total 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 Equus Total 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 Equus Total Return, you can compare the effects of market volatilities on Rand Capital and Equus Total 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 Equus Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and Equus Total.

Diversification Opportunities for Rand Capital and Equus Total

0.75

Correlation Coefficient

Rand Capital  Equus Total

Poor diversification

The 3 months correlation between Rand and Equus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Equus Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equus Total Return 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 Equus Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equus Total Return has no effect on the direction of Rand Capital i.e., Rand Capital and Equus Total go up and down completely randomly.

Pair Corralation between Rand Capital and Equus Total

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 1.16 times more return on investment than Equus Total. However, Rand Capital is 1.16 times more volatile than Equus Total Return. It trades about 0.04 of its potential returns per unit of risk. Equus Total Return is currently generating about 0.0 per unit of risk. If you would invest  1,793  in Rand Capital Corp on December 27, 2024 and sell it today you would earn a total of  107.00  from holding Rand Capital Corp or generate 5.97% return on investment over 90 days.

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

Rand Capital Corp  vs.  Equus Total Return

Rand Capital Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Equus Total Return

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equus Total Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Equus Total is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rand Capital and Equus Total

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

The idea behind Rand Capital Corp and Equus Total Return 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.