Correlation Between Gangotri Textiles and GACM Technologies

Can any of the company-specific risk be diversified away by investing in both Gangotri Textiles and GACM Technologies 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 Gangotri Textiles and GACM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gangotri Textiles Limited and GACM Technologies Limited, you can compare the effects of market volatilities on Gangotri Textiles and GACM Technologies 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 Gangotri Textiles with a short position of GACM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gangotri Textiles and GACM Technologies.

Diversification Opportunities for Gangotri Textiles and GACM Technologies

0.64

Correlation Coefficient

Gangotri Textiles  GACM Technologies

Poor diversification

The 3 months correlation between Gangotri and GACM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gangotri Textiles Limited and GACM Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GACM Technologies and Gangotri Textiles 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 Gangotri Textiles Limited are associated (or correlated) with GACM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GACM Technologies has no effect on the direction of Gangotri Textiles i.e., Gangotri Textiles and GACM Technologies go up and down completely randomly.

Pair Corralation between Gangotri Textiles and GACM Technologies

Assuming the 90 days trading horizon Gangotri Textiles Limited is expected to generate 0.51 times more return on investment than GACM Technologies. However, Gangotri Textiles Limited is 1.95 times less risky than GACM Technologies. It trades about 0.07 of its potential returns per unit of risk. GACM Technologies Limited is currently generating about -0.23 per unit of risk. If you would invest  85.00  in Gangotri Textiles Limited on September 23, 2024 and sell it today you would earn a total of  29.00  from holding Gangotri Textiles Limited or generate 34.12% return on investment over 90 days.

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

Gangotri Textiles Limited  vs.  GACM Technologies Limited

Gangotri Textiles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gangotri Textiles Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

GACM Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GACM Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Gangotri Textiles and GACM Technologies

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

The idea behind Gangotri Textiles Limited and GACM Technologies Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.