Correlation Between GT Capital and Security Bank

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

By analyzing existing cross correlation between GT Capital Holdings and Security Bank Corp, you can compare the effects of market volatilities on GT Capital and Security Bank 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 GT Capital with a short position of Security Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and Security Bank.

Diversification Opportunities for GT Capital and Security Bank

0.61

Correlation Coefficient

GT Capital  Security Bank

Poor diversification

The 3 months correlation between GTCAP and Security is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Security Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Bank Corp and GT 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 GT Capital Holdings are associated (or correlated) with Security Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Bank Corp has no effect on the direction of GT Capital i.e., GT Capital and Security Bank go up and down completely randomly.

Pair Corralation between GT Capital and Security Bank

Assuming the 90 days trading horizon GT Capital Holdings is expected to under-perform the Security Bank. But the stock apears to be less risky and, when comparing its historical volatility, GT Capital Holdings is 1.24 times less risky than Security Bank. The stock trades about -0.06 of its potential returns per unit of risk. The Security Bank Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8,200  in Security Bank Corp on September 18, 2024 and sell it today you would earn a total of  430.00  from holding Security Bank Corp or generate 5.24% return on investment over 90 days.

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

GT Capital Holdings  vs.  Security Bank Corp

GT Capital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GT Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Security Bank Corp

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Security Bank Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Security Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GT Capital and Security Bank

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

The idea behind GT Capital Holdings and Security Bank Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.