Correlation Between Regional Container and G Capital

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

By analyzing existing cross correlation between Regional Container Lines and G Capital Public, you can compare the effects of market volatilities on Regional Container and G 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 Regional Container with a short position of G Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and G Capital.

Diversification Opportunities for Regional Container and G Capital

-0.49

Correlation Coefficient

Regional Container  G Capital

Very good diversification

The 3 months correlation between Regional and GCAP is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and G Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Capital Public and Regional Container 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 Regional Container Lines are associated (or correlated) with G Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Capital Public has no effect on the direction of Regional Container i.e., Regional Container and G Capital go up and down completely randomly.

Pair Corralation between Regional Container and G Capital

Assuming the 90 days trading horizon Regional Container is expected to generate 34.37 times less return on investment than G Capital. But when comparing it to its historical volatility, Regional Container Lines is 40.34 times less risky than G Capital. It trades about 0.14 of its potential returns per unit of risk. G Capital Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.00  in G Capital Public on September 3, 2024 and sell it today you would earn a total of  40.00  from holding G Capital Public or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Regional Container Lines  vs.  G Capital Public

Regional Container Lines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Container Lines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Regional Container disclosed solid returns over the last few months and may actually be approaching a breakup point.

G Capital Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G Capital Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, G Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regional Container and G Capital

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

The idea behind Regional Container Lines and G Capital Public 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.