Correlation Between Philex Mining and GT Capital

Can any of the company-specific risk be diversified away by investing in both Philex Mining and GT Capital 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 Philex Mining and GT Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Philex Mining Corp and GT Capital Holdings, you can compare the effects of market volatilities on Philex Mining and GT Capital 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 Philex Mining with a short position of GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philex Mining and GT Capital.

Diversification Opportunities for Philex Mining and GT Capital

0.7

Correlation Coefficient

Philex Mining  GT Capital

Poor diversification

The 3 months correlation between Philex and GTCAP is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings and Philex Mining 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 Philex Mining Corp are associated (or correlated) with GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of Philex Mining i.e., Philex Mining and GT Capital go up and down completely randomly.

Pair Corralation between Philex Mining and GT Capital

Assuming the 90 days trading horizon Philex Mining Corp is expected to generate 1.11 times more return on investment than GT Capital. However, Philex Mining is 1.11 times more volatile than GT Capital Holdings. It trades about 0.03 of its potential returns per unit of risk. GT Capital Holdings is currently generating about 0.02 per unit of risk. If you would invest  270.00  in Philex Mining Corp on September 2, 2024 and sell it today you would earn a total of  8.00  from holding Philex Mining Corp or generate 2.96% return on investment over 90 days.

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

Philex Mining Corp  vs.  GT Capital Holdings

Philex Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philex Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Philex Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

GT Capital Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GT Capital Holdings are ranked lower than 1 (%) 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.

Pair Trading with Philex Mining and GT Capital

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

The idea behind Philex Mining Corp and GT Capital 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.