Correlation Between Aboitiz Equity and GT Capital

Can any of the company-specific risk be diversified away by investing in both Aboitiz Equity and GT 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 Aboitiz Equity and GT Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aboitiz Equity Ventures and GT Capital Holdings, you can compare the effects of market volatilities on Aboitiz Equity and GT 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 Aboitiz Equity with a short position of GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aboitiz Equity and GT Capital.

Diversification Opportunities for Aboitiz Equity and GT Capital

-0.6

Correlation Coefficient

Aboitiz Equity  GT Capital

Excellent diversification

The 3 months correlation between Aboitiz and GTPPB is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aboitiz Equity Ventures and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings and Aboitiz Equity 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 Aboitiz Equity Ventures are associated (or correlated) with GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of Aboitiz Equity i.e., Aboitiz Equity and GT Capital go up and down completely randomly.

Pair Corralation between Aboitiz Equity and GT Capital

Assuming the 90 days trading horizon Aboitiz Equity Ventures is expected to under-perform the GT Capital. In addition to that, Aboitiz Equity is 1.14 times more volatile than GT Capital Holdings. It trades about -0.06 of its total potential returns per unit of risk. GT Capital Holdings is currently generating about 0.09 per unit of volatility. If you would invest  94,814  in GT Capital Holdings on December 5, 2024 and sell it today you would earn a total of  4,186  from holding GT Capital Holdings or generate 4.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	63.79%
Values	Daily Returns

Aboitiz Equity Ventures  vs.  GT Capital Holdings

Aboitiz Equity Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Aboitiz Equity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

GT Capital Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GT Capital Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, GT Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aboitiz Equity and GT Capital

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

The idea behind Aboitiz Equity Ventures and GT Capital Holdings 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.