Correlation Between Alliance Select and GT Capital

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

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

Diversification Opportunities for Alliance Select and GT Capital

0.11

Correlation Coefficient

Alliance Select  GT Capital

Average diversification

The 3 months correlation between Alliance and GTPPB is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Select Foods 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 Alliance Select 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 Alliance Select Foods 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 Alliance Select i.e., Alliance Select and GT Capital go up and down completely randomly.

Pair Corralation between Alliance Select and GT Capital

Assuming the 90 days trading horizon Alliance Select Foods is expected to generate 5.51 times more return on investment than GT Capital. However, Alliance Select is 5.51 times more volatile than GT Capital Holdings. It trades about 0.15 of its potential returns per unit of risk. GT Capital Holdings is currently generating about 0.01 per unit of risk. If you would invest  40.00  in Alliance Select Foods on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Alliance Select Foods or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.44%
Values	Daily Returns

Alliance Select Foods  vs.  GT Capital Holdings

Alliance Select Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Select Foods are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alliance Select unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 relatively invariable basic indicators, GT Capital is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Alliance Select and GT Capital

The main advantage of trading using opposite Alliance Select and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Select 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 Alliance Select Foods 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..