Correlation Between First Capital and Pro Real

Can any of the company-specific risk be diversified away by investing in both First Capital and Pro Real 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 Pro Real 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 Pro Real Estate, you can compare the effects of market volatilities on First Capital and Pro Real 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 Pro Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Pro Real.

Diversification Opportunities for First Capital and Pro Real

0.91

Correlation Coefficient

First Capital  Pro Real

Almost no diversification

The 3 months correlation between First and Pro is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Capital Real and Pro Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Real Estate 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 Pro Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Real Estate has no effect on the direction of First Capital i.e., First Capital and Pro Real go up and down completely randomly.

Pair Corralation between First Capital and Pro Real

Assuming the 90 days trading horizon First Capital is expected to generate 1.31 times less return on investment than Pro Real. But when comparing it to its historical volatility, First Capital Real is 1.1 times less risky than Pro Real. It trades about 0.25 of its potential returns per unit of risk. Pro Real Estate is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  476.00  in Pro Real Estate on April 22, 2025 and sell it today you would earn a total of  105.00  from holding Pro Real Estate or generate 22.06% return on investment over 90 days.

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

First Capital Real  vs.  Pro Real Estate

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 20 (%) 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.

Pro Real Estate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Real Estate are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pro Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Capital and Pro Real

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

The idea behind First Capital Real and Pro Real Estate 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.