Correlation Between President Securities and Capital Futures
Can any of the company-specific risk be diversified away by investing in both President Securities and Capital Futures 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 Futures 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 Futures Corp, you can compare the effects of market volatilities on President Securities and Capital Futures 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 Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Securities and Capital Futures.
Diversification Opportunities for President Securities and Capital Futures
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between President and Capital is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding President Securities Corp and Capital Futures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Futures 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 Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Futures Corp has no effect on the direction of President Securities i.e., President Securities and Capital Futures go up and down completely randomly.
Pair Corralation between President Securities and Capital Futures
Assuming the 90 days trading horizon President Securities is expected to generate 2.07 times less return on investment than Capital Futures. But when comparing it to its historical volatility, President Securities Corp is 1.31 times less risky than Capital Futures. It trades about 0.09 of its potential returns per unit of risk. Capital Futures Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,640 in Capital Futures Corp on August 30, 2024 and sell it today you would earn a total of 220.00 from holding Capital Futures Corp or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
President Securities Corp vs. Capital Futures Corp
Performance |
| Timeline |
| President Securities Corp |
| Capital Futures Corp |
President Securities and Capital Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Securities and Capital Futures
The main advantage of trading using opposite President Securities and Capital Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Securities position performs unexpectedly, Capital Futures 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 Futures will offset losses from the drop in Capital Futures' long position.| President Securities vs. Taiwan Secom Co | President Securities vs. TTET Union Corp | President Securities vs. China Steel Chemical | President Securities vs. Taiwan Shin Kong |
| Capital Futures vs. Hung Sheng Construction | Capital Futures vs. Mercuries Life Insurance | Capital Futures vs. Sinher Technology | Capital Futures vs. YungShin Global Holding |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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