Correlation Between G Capital and Airports

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

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

Diversification Opportunities for G Capital and Airports

0.83

Correlation Coefficient

G Capital  Airports

Very poor diversification

The 3 months correlation between GCAP and Airports is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and G Capital 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 G Capital Public are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of G Capital i.e., G Capital and Airports go up and down completely randomly.

Pair Corralation between G Capital and Airports

Assuming the 90 days trading horizon G Capital Public is expected to under-perform the Airports. In addition to that, G Capital is 2.03 times more volatile than Airports of Thailand. It trades about -0.17 of its total potential returns per unit of risk. Airports of Thailand is currently generating about -0.18 per unit of volatility. If you would invest  6,393  in Airports of Thailand on December 30, 2024 and sell it today you would lose (2,543) from holding Airports of Thailand or give up 39.78% of portfolio value over 90 days.

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

G Capital Public  vs.  Airports of Thailand

G Capital Public

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Airports of Thailand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Airports of Thailand 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with G Capital and Airports

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

The idea behind G Capital Public and Airports of Thailand 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.