Correlation Between CI Group and G Capital

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

By analyzing existing cross correlation between CI Group Public and G Capital Public, you can compare the effects of market volatilities on CI Group and G 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 CI Group with a short position of G Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Group and G Capital.

Diversification Opportunities for CI Group and G Capital

-0.14

Correlation Coefficient

CI Group  G Capital

Good diversification

The 3 months correlation between CIG and GCAP is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CI Group Public and G Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Capital Public and CI Group 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 CI Group Public are associated (or correlated) with G Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Capital Public has no effect on the direction of CI Group i.e., CI Group and G Capital go up and down completely randomly.

Pair Corralation between CI Group and G Capital

Assuming the 90 days trading horizon CI Group Public is expected to generate 2.91 times more return on investment than G Capital. However, CI Group is 2.91 times more volatile than G Capital Public. It trades about 0.09 of its potential returns per unit of risk. G Capital Public is currently generating about -0.28 per unit of risk. If you would invest  4.00  in CI Group Public on September 17, 2024 and sell it today you would earn a total of  1.00  from holding CI Group Public or generate 25.0% return on investment over 90 days.

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

CI Group Public  vs.  G Capital Public

CI Group Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Group Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, CI Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

G Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with CI Group and G Capital

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

The idea behind CI Group Public and G Capital Public 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.