Correlation Between GACM Technologies and Bombay Burmah

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

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

Diversification Opportunities for GACM Technologies and Bombay Burmah

0.15

Correlation Coefficient

GACM Technologies  Bombay Burmah

Average diversification

The 3 months correlation between GACM and Bombay is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Bombay Burmah Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombay Burmah Trading and GACM Technologies 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 GACM Technologies Limited are associated (or correlated) with Bombay Burmah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombay Burmah Trading has no effect on the direction of GACM Technologies i.e., GACM Technologies and Bombay Burmah go up and down completely randomly.

Pair Corralation between GACM Technologies and Bombay Burmah

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the Bombay Burmah. In addition to that, GACM Technologies is 1.13 times more volatile than Bombay Burmah Trading. It trades about -0.23 of its total potential returns per unit of risk. Bombay Burmah Trading is currently generating about 0.06 per unit of volatility. If you would invest  157,272  in Bombay Burmah Trading on October 6, 2024 and sell it today you would earn a total of  62,113  from holding Bombay Burmah Trading or generate 39.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

GACM Technologies Limited  vs.  Bombay Burmah Trading

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 rather sound fundamental indicators, GACM Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bombay Burmah Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bombay Burmah Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GACM Technologies and Bombay Burmah

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

The idea behind GACM Technologies Limited and Bombay Burmah Trading 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.