Correlation Between G Capital and CPR Gomu

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

Diversification Opportunities for G Capital and CPR Gomu

-0.53

Correlation Coefficient

G Capital  CPR Gomu

Excellent diversification

The 3 months correlation between GCAP and CPR is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and CPR Gomu Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPR Gomu Industrial 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 CPR Gomu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPR Gomu Industrial has no effect on the direction of G Capital i.e., G Capital and CPR Gomu go up and down completely randomly.

Pair Corralation between G Capital and CPR Gomu

Assuming the 90 days trading horizon G Capital Public is expected to under-perform the CPR Gomu. In addition to that, G Capital is 3.23 times more volatile than CPR Gomu Industrial. It trades about -0.25 of its total potential returns per unit of risk. CPR Gomu Industrial is currently generating about -0.06 per unit of volatility. If you would invest  346.00  in CPR Gomu Industrial on September 17, 2024 and sell it today you would lose (8.00) from holding CPR Gomu Industrial or give up 2.31% of portfolio value over 90 days.

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

G Capital Public  vs.  CPR Gomu Industrial

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.

CPR Gomu Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CPR Gomu Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, CPR Gomu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with G Capital and CPR Gomu

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

The idea behind G Capital Public and CPR Gomu Industrial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.