Correlation Between GT Capital and Megawide Construction
Can any of the company-specific risk be diversified away by investing in both GT Capital and Megawide Construction 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 Megawide Construction 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 Megawide Construction Corp, you can compare the effects of market volatilities on GT Capital and Megawide Construction 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 Megawide Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and Megawide Construction.
Diversification Opportunities for GT Capital and Megawide Construction
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GTCAP and Megawide is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Megawide Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megawide Construction 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 Megawide Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megawide Construction has no effect on the direction of GT Capital i.e., GT Capital and Megawide Construction go up and down completely randomly.
Pair Corralation between GT Capital and Megawide Construction
Assuming the 90 days trading horizon GT Capital is expected to generate 1.54 times less return on investment than Megawide Construction. But when comparing it to its historical volatility, GT Capital Holdings is 1.2 times less risky than Megawide Construction. It trades about 0.04 of its potential returns per unit of risk. Megawide Construction Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,838 in Megawide Construction Corp on September 14, 2024 and sell it today you would earn a total of 952.00 from holding Megawide Construction Corp or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 42.75% |
| Values | Daily Returns |
GT Capital Holdings vs. Megawide Construction Corp
Performance |
| Timeline |
| GT Capital Holdings |
| Megawide Construction |
GT Capital and Megawide Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GT Capital and Megawide Construction
The main advantage of trading using opposite GT Capital and Megawide Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GT Capital position performs unexpectedly, Megawide Construction 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 Megawide Construction will offset losses from the drop in Megawide Construction's long position.| GT Capital vs. Premiere Entertainment | GT Capital vs. Metropolitan Bank Trust | GT Capital vs. Figaro Coffee Group | GT Capital vs. Philippine Business Bank |
| Megawide Construction vs. Araneta Properties | Megawide Construction vs. GT Capital Holdings | Megawide Construction vs. Allhome Corp | Megawide Construction vs. Jollibee Foods 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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