Correlation Between INTERNATIONAL BREWERIES and CAP PLC
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By analyzing existing cross correlation between INTERNATIONAL BREWERIES PLC and CAP PLC, you can compare the effects of market volatilities on INTERNATIONAL BREWERIES and CAP PLC 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 INTERNATIONAL BREWERIES with a short position of CAP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNATIONAL BREWERIES and CAP PLC.
Diversification Opportunities for INTERNATIONAL BREWERIES and CAP PLC
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INTERNATIONAL and CAP is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL BREWERIES PLC and CAP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP PLC and INTERNATIONAL BREWERIES 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 INTERNATIONAL BREWERIES PLC are associated (or correlated) with CAP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP PLC has no effect on the direction of INTERNATIONAL BREWERIES i.e., INTERNATIONAL BREWERIES and CAP PLC go up and down completely randomly.
Pair Corralation between INTERNATIONAL BREWERIES and CAP PLC
Assuming the 90 days trading horizon INTERNATIONAL BREWERIES PLC is expected to generate 3.03 times more return on investment than CAP PLC. However, INTERNATIONAL BREWERIES is 3.03 times more volatile than CAP PLC. It trades about 0.04 of its potential returns per unit of risk. CAP PLC is currently generating about -0.21 per unit of risk. If you would invest 400.00 in INTERNATIONAL BREWERIES PLC on September 13, 2024 and sell it today you would earn a total of 3.00 from holding INTERNATIONAL BREWERIES PLC or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERNATIONAL BREWERIES PLC vs. CAP PLC
Performance |
| Timeline |
| INTERNATIONAL BREWERIES |
| CAP PLC |
INTERNATIONAL BREWERIES and CAP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERNATIONAL BREWERIES and CAP PLC
The main advantage of trading using opposite INTERNATIONAL BREWERIES and CAP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERNATIONAL BREWERIES position performs unexpectedly, CAP PLC 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 CAP PLC will offset losses from the drop in CAP PLC's long position.The idea behind INTERNATIONAL BREWERIES PLC and CAP PLC 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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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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