Correlation Between CAP LEASE and SupplyMe Capital

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

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

Diversification Opportunities for CAP LEASE and SupplyMe Capital

0.78

Correlation Coefficient

CAP LEASE  SupplyMe Capital

Poor diversification

The 3 months correlation between CAP and SupplyMe is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and SupplyMe Capital PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SupplyMe Capital PLC and CAP LEASE 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 CAP LEASE AVIATION are associated (or correlated) with SupplyMe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SupplyMe Capital PLC has no effect on the direction of CAP LEASE i.e., CAP LEASE and SupplyMe Capital go up and down completely randomly.

Pair Corralation between CAP LEASE and SupplyMe Capital

Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the SupplyMe Capital. But the stock apears to be less risky and, when comparing its historical volatility, CAP LEASE AVIATION is 5.41 times less risky than SupplyMe Capital. The stock trades about -0.19 of its potential returns per unit of risk. The SupplyMe Capital PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  0.80  in SupplyMe Capital PLC on September 12, 2024 and sell it today you would lose (0.39) from holding SupplyMe Capital PLC or give up 48.75% of portfolio value over 90 days.

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

CAP LEASE AVIATION  vs.  SupplyMe Capital PLC

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SupplyMe Capital PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SupplyMe Capital PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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 CAP LEASE and SupplyMe Capital

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

The idea behind CAP LEASE AVIATION and SupplyMe Capital PLC 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 Global Correlations module to find global opportunities by holding instruments from different markets.