Correlation Between Apex Mining and GT Capital

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

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

Diversification Opportunities for Apex Mining and GT Capital

0.59

Correlation Coefficient

Apex Mining  GT Capital

Very weak diversification

The 3 months correlation between Apex and GTCAP is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Apex Mining Co 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 Apex Mining 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 Apex Mining Co 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 Apex Mining i.e., Apex Mining and GT Capital go up and down completely randomly.

Pair Corralation between Apex Mining and GT Capital

Assuming the 90 days trading horizon Apex Mining Co is expected to under-perform the GT Capital. But the stock apears to be less risky and, when comparing its historical volatility, Apex Mining Co is 1.01 times less risky than GT Capital. The stock trades about -0.03 of its potential returns per unit of risk. The GT Capital Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  59,266  in GT Capital Holdings on September 3, 2024 and sell it today you would earn a total of  6,684  from holding GT Capital Holdings or generate 11.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Apex Mining Co  vs.  GT Capital Holdings

Apex Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apex Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

GT Capital Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GT Capital Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, GT Capital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Apex Mining and GT Capital

The main advantage of trading using opposite Apex Mining and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apex Mining 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 Apex Mining Co 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.