Correlation Between GT Capital and Globe Telecom
Can any of the company-specific risk be diversified away by investing in both GT Capital and Globe Telecom 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 Globe Telecom 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 Globe Telecom, you can compare the effects of market volatilities on GT Capital and Globe Telecom 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 Globe Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and Globe Telecom.
Diversification Opportunities for GT Capital and Globe Telecom
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GTCAP and Globe is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom 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 Globe Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Telecom has no effect on the direction of GT Capital i.e., GT Capital and Globe Telecom go up and down completely randomly.
Pair Corralation between GT Capital and Globe Telecom
Assuming the 90 days trading horizon GT Capital Holdings is expected to generate 0.95 times more return on investment than Globe Telecom. However, GT Capital Holdings is 1.05 times less risky than Globe Telecom. It trades about -0.14 of its potential returns per unit of risk. Globe Telecom is currently generating about -0.16 per unit of risk. If you would invest 70,950 in GT Capital Holdings on September 13, 2024 and sell it today you would lose (7,550) from holding GT Capital Holdings or give up 10.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GT Capital Holdings vs. Globe Telecom
Performance |
| Timeline |
| GT Capital Holdings |
| Globe Telecom |
GT Capital and Globe Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GT Capital and Globe Telecom
The main advantage of trading using opposite GT Capital and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GT Capital position performs unexpectedly, Globe Telecom 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 Globe Telecom will offset losses from the drop in Globe Telecom's long position.| GT Capital vs. Manulife Financial Corp | GT Capital vs. Philippine Business Bank | GT Capital vs. House of Investments | GT Capital vs. Cebu Air Preferred |
| Globe Telecom vs. GT Capital Holdings | Globe Telecom vs. Allhome Corp | Globe Telecom vs. Jollibee Foods Corp | Globe Telecom vs. LFM Properties Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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