Correlation Between Ditto Public and G Capital

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

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

Diversification Opportunities for Ditto Public and G Capital

0.6

Correlation Coefficient

Ditto Public  G Capital

Poor diversification

The 3 months correlation between Ditto and GCAP is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ditto 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 Ditto Public 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 Ditto 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 Ditto Public i.e., Ditto Public and G Capital go up and down completely randomly.

Pair Corralation between Ditto Public and G Capital

Assuming the 90 days trading horizon Ditto Public is expected to under-perform the G Capital. But the stock apears to be less risky and, when comparing its historical volatility, Ditto Public is 45.35 times less risky than G Capital. The stock trades about -0.08 of its potential returns per unit of risk. The G Capital Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.00  in G Capital Public on September 3, 2024 and sell it today you would earn a total of  40.00  from holding G Capital Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Ditto Public  vs.  G Capital Public

Ditto Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ditto 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 fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

G Capital Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G Capital Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, G Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ditto Public and G Capital

The main advantage of trading using opposite Ditto Public and G Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ditto Public 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 Ditto 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.