Correlation Between Guaranty Trust and Centaur Media

Can any of the company-specific risk be diversified away by investing in both Guaranty Trust and Centaur 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 Guaranty Trust and Centaur Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guaranty Trust Holding and Centaur Media, you can compare the effects of market volatilities on Guaranty Trust and Centaur 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 Guaranty Trust with a short position of Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guaranty Trust and Centaur Media.

Diversification Opportunities for Guaranty Trust and Centaur Media

0.07

Correlation Coefficient

Guaranty Trust  Centaur Media

Significant diversification

The 3 months correlation between Guaranty and Centaur is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media and Guaranty Trust 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 Guaranty Trust Holding are associated (or correlated) with Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Guaranty Trust i.e., Guaranty Trust and Centaur Media go up and down completely randomly.

Pair Corralation between Guaranty Trust and Centaur Media

Assuming the 90 days trading horizon Guaranty Trust Holding is expected to generate 0.72 times more return on investment than Centaur Media. However, Guaranty Trust Holding is 1.38 times less risky than Centaur Media. It trades about -0.01 of its potential returns per unit of risk. Centaur Media is currently generating about -0.13 per unit of risk. If you would invest  200.00  in Guaranty Trust Holding on October 9, 2024 and sell it today you would lose (10.00) from holding Guaranty Trust Holding or give up 5.0% of portfolio value over 90 days.

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

Guaranty Trust Holding  vs.  Centaur Media

Guaranty Trust Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Guaranty Trust disclosed solid returns over the last few months and may actually be approaching a breakup point.

Centaur Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guaranty Trust and Centaur Media

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

The idea behind Guaranty Trust Holding and Centaur Media 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.