Correlation Between GT Capital and Prime Media

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

Diversification Opportunities for GT Capital and Prime Media

0.2

Correlation Coefficient

GT Capital  Prime Media

Modest diversification

The 3 months correlation between GTCAP and Prime is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Prime Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Media Holdings 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 Prime Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Media Holdings has no effect on the direction of GT Capital i.e., GT Capital and Prime Media go up and down completely randomly.

Pair Corralation between GT Capital and Prime Media

Assuming the 90 days trading horizon GT Capital Holdings is expected to under-perform the Prime Media. But the stock apears to be less risky and, when comparing its historical volatility, GT Capital Holdings is 2.07 times less risky than Prime Media. The stock trades about -0.17 of its potential returns per unit of risk. The Prime Media Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Prime Media Holdings on November 29, 2024 and sell it today you would lose (8.00) from holding Prime Media Holdings or give up 4.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.83%
Values	Daily Returns

GT Capital Holdings  vs.  Prime Media Holdings

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

Prime Media Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prime Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Prime Media is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GT Capital and Prime Media

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

The idea behind GT Capital Holdings and Prime Media Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.