Correlation Between First Capital and Dream Impact

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

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

Diversification Opportunities for First Capital and Dream Impact

-0.84

Correlation Coefficient

First Capital  Dream Impact

Pay attention - limited upside

The 3 months correlation between First and Dream is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Capital Real and Dream Impact Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Impact Trust and First Capital 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 First Capital Real are associated (or correlated) with Dream Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Impact Trust has no effect on the direction of First Capital i.e., First Capital and Dream Impact go up and down completely randomly.

Pair Corralation between First Capital and Dream Impact

Assuming the 90 days trading horizon First Capital Real is expected to generate 0.54 times more return on investment than Dream Impact. However, First Capital Real is 1.84 times less risky than Dream Impact. It trades about 0.24 of its potential returns per unit of risk. Dream Impact Trust is currently generating about -0.13 per unit of risk. If you would invest  1,628  in First Capital Real on April 23, 2025 and sell it today you would earn a total of  246.00  from holding First Capital Real or generate 15.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

First Capital Real  vs.  Dream Impact Trust

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 18 (%) 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.

Dream Impact Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dream Impact Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with First Capital and Dream Impact

The main advantage of trading using opposite First Capital and Dream Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, Dream Impact 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 Dream Impact will offset losses from the drop in Dream Impact's long position.

The idea behind First Capital Real and Dream Impact Trust 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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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..