Correlation Between G Capital and CI Group

Can any of the company-specific risk be diversified away by investing in both G Capital and CI Group 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 CI Group 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 CI Group Public, you can compare the effects of market volatilities on G Capital and CI Group 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 CI Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Capital and CI Group.

Diversification Opportunities for G Capital and CI Group

0.34

Correlation Coefficient

G Capital  CI Group

Weak diversification

The 3 months correlation between GCAP and CIG is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and CI Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Group Public 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 CI Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Group Public has no effect on the direction of G Capital i.e., G Capital and CI Group go up and down completely randomly.

Pair Corralation between G Capital and CI Group

Assuming the 90 days trading horizon G Capital Public is expected to under-perform the CI Group. But the stock apears to be less risky and, when comparing its historical volatility, G Capital Public is 3.71 times less risky than CI Group. The stock trades about -0.13 of its potential returns per unit of risk. The CI Group Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4.00  in CI Group Public on December 27, 2024 and sell it today you would lose (1.00) from holding CI Group Public or give up 25.0% of portfolio value over 90 days.

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

G Capital Public  vs.  CI Group Public

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.

CI Group Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CI Group Public are ranked lower than 3 (%) 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.

Pair Trading with G Capital and CI Group

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

The idea behind G Capital Public and CI Group 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.