Correlation Between President Securities and Capital Securities

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

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

Diversification Opportunities for President Securities and Capital Securities

0.37

Correlation Coefficient

President Securities  Capital Securities

Weak diversification

The 3 months correlation between President and Capital is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding President Securities Corp and Capital Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Securities Corp and President Securities 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 President Securities Corp are associated (or correlated) with Capital Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Securities Corp has no effect on the direction of President Securities i.e., President Securities and Capital Securities go up and down completely randomly.

Pair Corralation between President Securities and Capital Securities

If you would invest  1,135  in Capital Securities Corp on September 5, 2024 and sell it today you would earn a total of  1,240  from holding Capital Securities Corp or generate 109.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

President Securities Corp  vs.  Capital Securities Corp

President Securities Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days President Securities Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, President Securities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Capital Securities Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Securities Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Capital Securities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with President Securities and Capital Securities

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

The idea behind President Securities Corp and Capital Securities Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.