Correlation Between GT Capital and Alliance Global

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

By analyzing existing cross correlation between GT Capital Holdings and Alliance Global Group, you can compare the effects of market volatilities on GT Capital and Alliance Global 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 GT Capital with a short position of Alliance Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and Alliance Global.

Diversification Opportunities for GT Capital and Alliance Global

0.36

Correlation Coefficient

GT Capital  Alliance Global

Weak diversification

The 3 months correlation between GTCAP and Alliance is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global Group and GT 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 GT Capital Holdings are associated (or correlated) with Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of GT Capital i.e., GT Capital and Alliance Global go up and down completely randomly.

Pair Corralation between GT Capital and Alliance Global

Assuming the 90 days trading horizon GT Capital Holdings is expected to under-perform the Alliance Global. In addition to that, GT Capital is 1.26 times more volatile than Alliance Global Group. It trades about -0.12 of its total potential returns per unit of risk. Alliance Global Group is currently generating about -0.08 per unit of volatility. If you would invest  925.00  in Alliance Global Group on October 10, 2024 and sell it today you would lose (65.00) from holding Alliance Global Group or give up 7.03% of portfolio value over 90 days.

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

GT Capital Holdings  vs.  Alliance Global Group

GT Capital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GT Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Alliance Global Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with GT Capital and Alliance Global

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

The idea behind GT Capital Holdings and Alliance Global Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.