Correlation Between Choice Properties and First Capital

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

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

Diversification Opportunities for Choice Properties and First Capital

0.66

Correlation Coefficient

Choice Properties  First Capital

Poor diversification

The 3 months correlation between Choice and First is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Choice Properties Real 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 Choice Properties 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 Choice Properties Real 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 Choice Properties i.e., Choice Properties and First Capital go up and down completely randomly.

Pair Corralation between Choice Properties and First Capital

Assuming the 90 days trading horizon Choice Properties is expected to generate 5.49 times less return on investment than First Capital. But when comparing it to its historical volatility, Choice Properties Real is 1.06 times less risky than First Capital. It trades about 0.05 of its potential returns per unit of risk. First Capital Real is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,605  in First Capital Real on April 21, 2025 and sell it today you would earn a total of  283.00  from holding First Capital Real or generate 17.63% return on investment over 90 days.

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

Choice Properties Real  vs.  First Capital Real

Choice Properties Real

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Choice Properties Real are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Choice Properties 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

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Capital Real are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Choice Properties and First Capital

The main advantage of trading using opposite Choice Properties and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Properties 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 Choice Properties Real 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.