Correlation Between G Capital and Dimet Public

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

Diversification Opportunities for G Capital and Dimet Public

0.49

Correlation Coefficient

G Capital  Dimet Public

Very weak diversification

The 3 months correlation between GCAP and Dimet is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and Dimet Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimet 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 Dimet Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimet Public has no effect on the direction of G Capital i.e., G Capital and Dimet Public go up and down completely randomly.

Pair Corralation between G Capital and Dimet Public

Assuming the 90 days trading horizon G Capital Public is expected to generate 0.75 times more return on investment than Dimet Public. However, G Capital Public is 1.33 times less risky than Dimet Public. It trades about -0.06 of its potential returns per unit of risk. Dimet Public is currently generating about -0.09 per unit of risk. If you would invest  36.00  in G Capital Public on December 2, 2024 and sell it today you would lose (7.00) from holding G Capital Public or give up 19.44% of portfolio value over 90 days.

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

G Capital Public  vs.  Dimet 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.

Dimet Public

Risk-Adjusted Performance

Very Weak

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

Pair Trading with G Capital and Dimet Public

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

The idea behind G Capital Public and Dimet 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.