Correlation Between Capital Futures and Good Finance
Can any of the company-specific risk be diversified away by investing in both Capital Futures and Good Finance 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 Capital Futures and Good Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Futures Corp and Good Finance Securities, you can compare the effects of market volatilities on Capital Futures and Good Finance 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 Capital Futures with a short position of Good Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Futures and Good Finance.
Diversification Opportunities for Capital Futures and Good Finance
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Capital and Good is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Capital Futures Corp and Good Finance Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Finance Securities and Capital Futures 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 Capital Futures Corp are associated (or correlated) with Good Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Finance Securities has no effect on the direction of Capital Futures i.e., Capital Futures and Good Finance go up and down completely randomly.
Pair Corralation between Capital Futures and Good Finance
Assuming the 90 days trading horizon Capital Futures is expected to generate 2.84 times less return on investment than Good Finance. But when comparing it to its historical volatility, Capital Futures Corp is 1.88 times less risky than Good Finance. It trades about 0.06 of its potential returns per unit of risk. Good Finance Securities is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,480 in Good Finance Securities on September 14, 2024 and sell it today you would earn a total of 920.00 from holding Good Finance Securities or generate 62.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Futures Corp vs. Good Finance Securities
Performance |
| Timeline |
| Capital Futures Corp |
| Good Finance Securities |
Capital Futures and Good Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Futures and Good Finance
The main advantage of trading using opposite Capital Futures and Good Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Futures position performs unexpectedly, Good Finance 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 Good Finance will offset losses from the drop in Good Finance's long position.| Capital Futures vs. IBF Financial Holdings | Capital Futures vs. Capital Securities Corp | Capital Futures vs. President Securities Corp | Capital Futures vs. China Bills Finance |
| Good Finance vs. IBF Financial Holdings | Good Finance vs. Capital Securities Corp | Good Finance vs. President Securities Corp | Good Finance vs. China Bills Finance |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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