Correlation Between First Capital and Minto Apartment

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

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

Diversification Opportunities for First Capital and Minto Apartment

0.67

Correlation Coefficient

First Capital  Minto Apartment

Poor diversification

The 3 months correlation between First and Minto is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Capital Real and Minto Apartment Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minto Apartment Real and First 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 First Capital Real are associated (or correlated) with Minto Apartment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minto Apartment Real has no effect on the direction of First Capital i.e., First Capital and Minto Apartment go up and down completely randomly.

Pair Corralation between First Capital and Minto Apartment

Assuming the 90 days trading horizon First Capital Real is expected to generate 0.73 times more return on investment than Minto Apartment. However, First Capital Real is 1.36 times less risky than Minto Apartment. It trades about 0.01 of its potential returns per unit of risk. Minto Apartment Real is currently generating about -0.17 per unit of risk. If you would invest  1,775  in First Capital Real on September 5, 2024 and sell it today you would earn a total of  1.00  from holding First Capital Real or generate 0.06% return on investment over 90 days.

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

First Capital Real  vs.  Minto Apartment Real

First Capital Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Capital Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, First Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Minto Apartment Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minto Apartment Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with First Capital and Minto Apartment

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

The idea behind First Capital Real and Minto Apartment Real 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.