Correlation Between GT Capital and Cirtek Holdings

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

Diversification Opportunities for GT Capital and Cirtek Holdings

-0.39

Correlation Coefficient

GT Capital  Cirtek Holdings

Very good diversification

The 3 months correlation between GTCAP and Cirtek is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Cirtek Holdings Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirtek Holdings Phil 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 Cirtek Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirtek Holdings Phil has no effect on the direction of GT Capital i.e., GT Capital and Cirtek Holdings go up and down completely randomly.

Pair Corralation between GT Capital and Cirtek Holdings

Assuming the 90 days trading horizon GT Capital Holdings is expected to under-perform the Cirtek Holdings. In addition to that, GT Capital is 1.33 times more volatile than Cirtek Holdings Philippines. It trades about -0.07 of its total potential returns per unit of risk. Cirtek Holdings Philippines is currently generating about 0.02 per unit of volatility. If you would invest  4,850  in Cirtek Holdings Philippines on September 12, 2024 and sell it today you would earn a total of  50.00  from holding Cirtek Holdings Philippines or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.56%
Values	Daily Returns

GT Capital Holdings  vs.  Cirtek Holdings Philippines

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 latest unsteady performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Cirtek Holdings Phil

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Cirtek Holdings Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Cirtek Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GT Capital and Cirtek Holdings

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

The idea behind GT Capital Holdings and Cirtek Holdings Philippines 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.