Correlation Between G Capital and Home Pottery
Can any of the company-specific risk be diversified away by investing in both G Capital and Home Pottery 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 Home Pottery 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 Home Pottery Public, you can compare the effects of market volatilities on G Capital and Home Pottery 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 Home Pottery. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Capital and Home Pottery.
Diversification Opportunities for G Capital and Home Pottery
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GCAP and Home is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and Home Pottery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Pottery 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 Home Pottery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Pottery Public has no effect on the direction of G Capital i.e., G Capital and Home Pottery go up and down completely randomly.
Pair Corralation between G Capital and Home Pottery
Assuming the 90 days trading horizon G Capital Public is expected to under-perform the Home Pottery. In addition to that, G Capital is 1.94 times more volatile than Home Pottery Public. It trades about -0.36 of its total potential returns per unit of risk. Home Pottery Public is currently generating about -0.07 per unit of volatility. If you would invest 48.00 in Home Pottery Public on August 28, 2024 and sell it today you would lose (2.00) from holding Home Pottery Public or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
G Capital Public vs. Home Pottery Public
Performance |
| Timeline |
| G Capital Public |
| Home Pottery Public |
G Capital and Home Pottery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G Capital and Home Pottery
The main advantage of trading using opposite G Capital and Home Pottery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G Capital position performs unexpectedly, Home Pottery 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 Home Pottery will offset losses from the drop in Home Pottery's long position.The idea behind G Capital Public and Home Pottery 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.| Home Pottery vs. International Research | Home Pottery vs. Hydrotek Public | Home Pottery vs. Getabec Public | Home Pottery vs. Internet Thailand 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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