Correlation Between Benguet Corp and GT Capital

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

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

Diversification Opportunities for Benguet Corp and GT Capital

-0.27

Correlation Coefficient

Benguet Corp  GT Capital

Very good diversification

The 3 months correlation between Benguet and GTCAP is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Benguet Corp A 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 Benguet Corp 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 Benguet Corp A 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 Benguet Corp i.e., Benguet Corp and GT Capital go up and down completely randomly.

Pair Corralation between Benguet Corp and GT Capital

Assuming the 90 days trading horizon Benguet Corp A is expected to generate 1.77 times more return on investment than GT Capital. However, Benguet Corp is 1.77 times more volatile than GT Capital Holdings. It trades about 0.05 of its potential returns per unit of risk. GT Capital Holdings is currently generating about -0.12 per unit of risk. If you would invest  343.00  in Benguet Corp A on December 5, 2024 and sell it today you would earn a total of  40.00  from holding Benguet Corp A or generate 11.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.34%
Values	Daily Returns

Benguet Corp A  vs.  GT Capital Holdings

Benguet Corp A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benguet Corp A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Benguet Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GT Capital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days GT Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Benguet Corp and GT Capital

The main advantage of trading using opposite Benguet Corp and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benguet Corp 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 Benguet Corp A 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.