Correlation Between BSR Real and First Capital

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

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

Diversification Opportunities for BSR Real and First Capital

0.69

Correlation Coefficient

BSR Real  First Capital

Poor diversification

The 3 months correlation between BSR and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BSR Real Estate and First Capital Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital Real and BSR Real 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 BSR Real Estate are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital Real has no effect on the direction of BSR Real i.e., BSR Real and First Capital go up and down completely randomly.

Pair Corralation between BSR Real and First Capital

Assuming the 90 days trading horizon BSR Real Estate is expected to generate 1.38 times more return on investment than First Capital. However, BSR Real is 1.38 times more volatile than First Capital Real. It trades about 0.04 of its potential returns per unit of risk. First Capital Real is currently generating about 0.01 per unit of risk. If you would invest  1,805  in BSR Real Estate on September 5, 2024 and sell it today you would earn a total of  53.00  from holding BSR Real Estate or generate 2.94% return on investment over 90 days.

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

BSR Real Estate  vs.  First Capital Real

BSR Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BSR Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, BSR Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with BSR Real and First Capital

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

The idea behind BSR Real Estate and First Capital 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.