Correlation Between Demco Public and G Capital
Can any of the company-specific risk be diversified away by investing in both Demco Public and G Capital 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 Demco Public and G Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Demco Public and G Capital Public, you can compare the effects of market volatilities on Demco Public and G Capital 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 Demco Public with a short position of G Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Demco Public and G Capital.
Diversification Opportunities for Demco Public and G Capital
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Demco and GCAP is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Demco Public and G Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Capital Public and Demco Public 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 Demco Public are associated (or correlated) with G Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Capital Public has no effect on the direction of Demco Public i.e., Demco Public and G Capital go up and down completely randomly.
Pair Corralation between Demco Public and G Capital
Assuming the 90 days trading horizon Demco Public is expected to under-perform the G Capital. But the stock apears to be less risky and, when comparing its historical volatility, Demco Public is 2.26 times less risky than G Capital. The stock trades about -0.51 of its potential returns per unit of risk. The G Capital Public is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 32.00 in G Capital Public on November 27, 2024 and sell it today you would lose (2.00) from holding G Capital Public or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Demco Public vs. G Capital Public
Performance |
| Timeline |
| Demco Public |
| G Capital Public |
Demco Public and G Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Demco Public and G Capital
The main advantage of trading using opposite Demco Public and G Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Demco Public position performs unexpectedly, G Capital 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 G Capital will offset losses from the drop in G Capital's long position.| Demco Public vs. Better World Green | Demco Public vs. CK Power Public | Demco Public vs. Gunkul Engineering Public | Demco Public vs. IRPC Public |
| G Capital vs. East Coast Furnitech | G Capital vs. Filter Vision Public | G Capital vs. Cho Thavee Public | G Capital vs. Akkhie Prakarn Public |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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