Correlation Between Rand Capital and Sapiens International

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

Diversification Opportunities for Rand Capital and Sapiens International

-0.32

Correlation Coefficient

Rand Capital  Sapiens International

Very good diversification

The 3 months correlation between Rand and Sapiens is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Rand Capital i.e., Rand Capital and Sapiens International go up and down completely randomly.

Pair Corralation between Rand Capital and Sapiens International

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 5.56 times more return on investment than Sapiens International. However, Rand Capital is 5.56 times more volatile than Sapiens International. It trades about 0.45 of its potential returns per unit of risk. Sapiens International is currently generating about 0.33 per unit of risk. If you would invest  1,614  in Rand Capital Corp on September 17, 2024 and sell it today you would earn a total of  666.00  from holding Rand Capital Corp or generate 41.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Rand Capital Corp  vs.  Sapiens International

Rand Capital Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 16 (%) 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.

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Rand Capital and Sapiens International

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

The idea behind Rand Capital Corp and Sapiens International 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.