Correlation Between GT Capital and Bright Kindle

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

Diversification Opportunities for GT Capital and Bright Kindle

0.22

Correlation Coefficient

GT Capital  Bright Kindle

Modest diversification

The 3 months correlation between GTCAP and Bright is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Bright Kindle Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Kindle Resources 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 Bright Kindle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Kindle Resources has no effect on the direction of GT Capital i.e., GT Capital and Bright Kindle go up and down completely randomly.

Pair Corralation between GT Capital and Bright Kindle

Assuming the 90 days trading horizon GT Capital Holdings is expected to generate 0.5 times more return on investment than Bright Kindle. However, GT Capital Holdings is 2.01 times less risky than Bright Kindle. It trades about 0.04 of its potential returns per unit of risk. Bright Kindle Resources is currently generating about -0.1 per unit of risk. If you would invest  63,500  in GT Capital Holdings on September 4, 2024 and sell it today you would earn a total of  2,450  from holding GT Capital Holdings or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

GT Capital Holdings  vs.  Bright Kindle Resources

GT Capital Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GT Capital Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, GT Capital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Bright Kindle Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bright Kindle Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GT Capital and Bright Kindle

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

The idea behind GT Capital Holdings and Bright Kindle Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.