Correlation Between Rand Capital and 26884ABB8

Can any of the company-specific risk be diversified away by investing in both Rand Capital and 26884ABB8 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 26884ABB8 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 ERP OPER LTD, you can compare the effects of market volatilities on Rand Capital and 26884ABB8 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 26884ABB8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and 26884ABB8.

Diversification Opportunities for Rand Capital and 26884ABB8

0.02

Correlation Coefficient

Rand Capital  26884ABB8

Significant diversification

The 3 months correlation between Rand and 26884ABB8 is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and ERP OPER LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERP OPER LTD 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 26884ABB8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERP OPER LTD has no effect on the direction of Rand Capital i.e., Rand Capital and 26884ABB8 go up and down completely randomly.

Pair Corralation between Rand Capital and 26884ABB8

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 2.74 times more return on investment than 26884ABB8. However, Rand Capital is 2.74 times more volatile than ERP OPER LTD. It trades about 0.17 of its potential returns per unit of risk. ERP OPER LTD is currently generating about -0.17 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 Together
Strength	Insignificant
Accuracy	77.05%
Values	Daily Returns

Rand Capital Corp  vs.  ERP OPER LTD

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.

ERP OPER LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ERP OPER LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ERP OPER LTD investors.

Pair Trading with Rand Capital and 26884ABB8

The main advantage of trading using opposite Rand Capital and 26884ABB8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand Capital position performs unexpectedly, 26884ABB8 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 26884ABB8 will offset losses from the drop in 26884ABB8's long position.

The idea behind Rand Capital Corp and ERP OPER LTD 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.