Correlation Between Victory Square and Capcom Co

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

By analyzing existing cross correlation between Victory Square Technologies and Capcom Co Ltd, you can compare the effects of market volatilities on Victory Square and Capcom Co 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 Victory Square with a short position of Capcom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Square and Capcom Co.

Diversification Opportunities for Victory Square and Capcom Co

0.13

Correlation Coefficient

Victory Square  Capcom Co

Average diversification

The 3 months correlation between Victory and Capcom is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Victory Square Technologies and Capcom Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capcom Co and Victory Square 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 Victory Square Technologies are associated (or correlated) with Capcom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capcom Co has no effect on the direction of Victory Square i.e., Victory Square and Capcom Co go up and down completely randomly.

Pair Corralation between Victory Square and Capcom Co

Assuming the 90 days horizon Victory Square Technologies is expected to generate 9.73 times more return on investment than Capcom Co. However, Victory Square is 9.73 times more volatile than Capcom Co Ltd. It trades about 0.29 of its potential returns per unit of risk. Capcom Co Ltd is currently generating about -0.26 per unit of risk. If you would invest  11.00  in Victory Square Technologies on October 9, 2024 and sell it today you would earn a total of  9.00  from holding Victory Square Technologies or generate 81.82% return on investment over 90 days.

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

Victory Square Technologies  vs.  Capcom Co Ltd

Victory Square Techn

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Square Technologies are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Victory Square reported solid returns over the last few months and may actually be approaching a breakup point.

Capcom Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capcom Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Capcom Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Victory Square and Capcom Co

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

The idea behind Victory Square Technologies and Capcom Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.