Correlation Between Century Small and Issachar Fund

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

By analyzing existing cross correlation between Century Small Cap and Issachar Fund Class, you can compare the effects of market volatilities on Century Small and Issachar Fund 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 Century Small with a short position of Issachar Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Small and Issachar Fund.

Diversification Opportunities for Century Small and Issachar Fund

0.85

Correlation Coefficient

Century Small  Issachar Fund

Very poor diversification

The 3 months correlation between Century and Issachar is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Century Small Cap and Issachar Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Issachar Fund Class and Century Small 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 Century Small Cap are associated (or correlated) with Issachar Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Issachar Fund Class has no effect on the direction of Century Small i.e., Century Small and Issachar Fund go up and down completely randomly.

Pair Corralation between Century Small and Issachar Fund

Assuming the 90 days horizon Century Small Cap is expected to generate 1.38 times more return on investment than Issachar Fund. However, Century Small is 1.38 times more volatile than Issachar Fund Class. It trades about 0.17 of its potential returns per unit of risk. Issachar Fund Class is currently generating about 0.2 per unit of risk. If you would invest  3,823  in Century Small Cap on September 12, 2024 and sell it today you would earn a total of  493.00  from holding Century Small Cap or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Century Small Cap  vs.  Issachar Fund Class

Century Small Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Century Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Issachar Fund Class

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Issachar Fund Class are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Issachar Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Century Small and Issachar Fund

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

The idea behind Century Small Cap and Issachar Fund Class 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.