Correlation Between GT Capital and Globe Telecom

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

Diversification Opportunities for GT Capital and Globe Telecom

0.16

Correlation Coefficient

GT Capital  Globe Telecom

Average diversification

The 3 months correlation between GTCAP and Globe is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom 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 Globe Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Telecom has no effect on the direction of GT Capital i.e., GT Capital and Globe Telecom go up and down completely randomly.

Pair Corralation between GT Capital and Globe Telecom

Assuming the 90 days trading horizon GT Capital Holdings is expected to under-perform the Globe Telecom. In addition to that, GT Capital is 1.76 times more volatile than Globe Telecom. It trades about -0.17 of its total potential returns per unit of risk. Globe Telecom is currently generating about 0.07 per unit of volatility. If you would invest  213,257  in Globe Telecom on December 30, 2024 and sell it today you would earn a total of  11,143  from holding Globe Telecom or generate 5.23% return on investment over 90 days.

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

GT Capital Holdings  vs.  Globe Telecom

GT Capital Holdings

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Globe Telecom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Telecom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Globe Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GT Capital and Globe Telecom

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

The idea behind GT Capital Holdings and Globe Telecom 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.