Correlation Between GT Capital and Philex Mining

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

Diversification Opportunities for GT Capital and Philex Mining

0.84

Correlation Coefficient

GT Capital  Philex Mining

Very poor diversification

The 3 months correlation between GTCAP and Philex is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Philex Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philex Mining Corp 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 Philex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philex Mining Corp has no effect on the direction of GT Capital i.e., GT Capital and Philex Mining go up and down completely randomly.

Pair Corralation between GT Capital and Philex Mining

Assuming the 90 days trading horizon GT Capital Holdings is expected to under-perform the Philex Mining. But the stock apears to be less risky and, when comparing its historical volatility, GT Capital Holdings is 1.04 times less risky than Philex Mining. The stock trades about -0.12 of its potential returns per unit of risk. The Philex Mining Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  306.00  in Philex Mining Corp on October 10, 2024 and sell it today you would lose (11.00) from holding Philex Mining Corp or give up 3.59% of portfolio value over 90 days.

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

GT Capital Holdings  vs.  Philex Mining Corp

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 weak 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.

Philex Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Philex Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Philex Mining 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 Philex Mining

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

The idea behind GT Capital Holdings and Philex Mining Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.