Correlation Between G Capital and Global Service

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

By analyzing existing cross correlation between G Capital Public and Global Service Center, you can compare the effects of market volatilities on G Capital and Global Service 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 G Capital with a short position of Global Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Capital and Global Service.

Diversification Opportunities for G Capital and Global Service

0.83

Correlation Coefficient

G Capital  Global Service

Very poor diversification

The 3 months correlation between GCAP and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and Global Service Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Service Center and G 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 G Capital Public are associated (or correlated) with Global Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Service Center has no effect on the direction of G Capital i.e., G Capital and Global Service go up and down completely randomly.

Pair Corralation between G Capital and Global Service

Assuming the 90 days trading horizon G Capital Public is expected to under-perform the Global Service. In addition to that, G Capital is 1.71 times more volatile than Global Service Center. It trades about -0.21 of its total potential returns per unit of risk. Global Service Center is currently generating about -0.07 per unit of volatility. If you would invest  59.00  in Global Service Center on September 23, 2024 and sell it today you would lose (3.00) from holding Global Service Center or give up 5.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

G Capital Public  vs.  Global Service Center

G Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Global Service Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Service Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with G Capital and Global Service

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

The idea behind G Capital Public and Global Service Center 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.