Correlation Between G Capital and Eastern Technical

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

Diversification Opportunities for G Capital and Eastern Technical

0.88

Correlation Coefficient

G Capital  Eastern Technical

Very poor diversification

The 3 months correlation between GCAP and Eastern is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and Eastern Technical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Technical 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 Eastern Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Technical has no effect on the direction of G Capital i.e., G Capital and Eastern Technical go up and down completely randomly.

Pair Corralation between G Capital and Eastern Technical

Assuming the 90 days trading horizon G Capital Public is expected to under-perform the Eastern Technical. In addition to that, G Capital is 1.91 times more volatile than Eastern Technical Engineering. It trades about -0.11 of its total potential returns per unit of risk. Eastern Technical Engineering is currently generating about -0.15 per unit of volatility. If you would invest  87.00  in Eastern Technical Engineering on December 30, 2024 and sell it today you would lose (17.00) from holding Eastern Technical Engineering or give up 19.54% 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.  Eastern Technical Engineering

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.

Eastern Technical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastern Technical Engineering 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 technical and fundamental 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 Eastern Technical

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

The idea behind G Capital Public and Eastern Technical Engineering 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.