Correlation Between A Cap and Spey Resources

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Can any of the company-specific risk be diversified away by investing in both A Cap and Spey Resources 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 A Cap and Spey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Cap Energy Limited and Spey Resources Corp, you can compare the effects of market volatilities on A Cap and Spey Resources 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 A Cap with a short position of Spey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of A Cap and Spey Resources.

Diversification Opportunities for A Cap and Spey Resources

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between APCDF and Spey is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding A Cap Energy Limited and Spey Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spey Resources Corp and A Cap 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 A Cap Energy Limited are associated (or correlated) with Spey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spey Resources Corp has no effect on the direction of A Cap i.e., A Cap and Spey Resources go up and down completely randomly.

Pair Corralation between A Cap and Spey Resources

If you would invest  7.02  in Spey Resources Corp on September 12, 2024 and sell it today you would earn a total of  2.42  from holding Spey Resources Corp or generate 34.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy4.76%
ValuesDaily Returns

A Cap Energy Limited  vs.  Spey Resources Corp

 Performance 
       Timeline  
A Cap Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days A Cap Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, A Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Spey Resources Corp 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Spey Resources Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Spey Resources reported solid returns over the last few months and may actually be approaching a breakup point.

A Cap and Spey Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with A Cap and Spey Resources

The main advantage of trading using opposite A Cap and Spey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A Cap position performs unexpectedly, Spey Resources 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 Spey Resources will offset losses from the drop in Spey Resources' long position.
The idea behind A Cap Energy Limited and Spey Resources Corp 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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