Correlation Between G Capital and Kingsmen CMTI

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

Diversification Opportunities for G Capital and Kingsmen CMTI

0.38

Correlation Coefficient

G Capital  Kingsmen CMTI

Weak diversification

The 3 months correlation between GCAP and Kingsmen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and Kingsmen CMTI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen CMTI Public 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 Kingsmen CMTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen CMTI Public has no effect on the direction of G Capital i.e., G Capital and Kingsmen CMTI go up and down completely randomly.

Pair Corralation between G Capital and Kingsmen CMTI

Assuming the 90 days trading horizon G Capital Public is expected to under-perform the Kingsmen CMTI. In addition to that, G Capital is 1.33 times more volatile than Kingsmen CMTI Public. It trades about -0.3 of its total potential returns per unit of risk. Kingsmen CMTI Public is currently generating about -0.04 per unit of volatility. If you would invest  131.00  in Kingsmen CMTI Public on September 12, 2024 and sell it today you would lose (12.00) from holding Kingsmen CMTI Public or give up 9.16% of portfolio value over 90 days.

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

G Capital Public  vs.  Kingsmen CMTI Public

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 conflicting 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.

Kingsmen CMTI Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingsmen CMTI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with G Capital and Kingsmen CMTI

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

The idea behind G Capital Public and Kingsmen CMTI Public 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 Transaction History module to view history of all your transactions and understand their impact on performance.