Correlation Between GACM Technologies and Computer Age

Can any of the company-specific risk be diversified away by investing in both GACM Technologies and Computer Age 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 Computer Age 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 Computer Age Management, you can compare the effects of market volatilities on GACM Technologies and Computer Age 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 Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of GACM Technologies and Computer Age.

Diversification Opportunities for GACM Technologies and Computer Age

0.06

Correlation Coefficient

GACM Technologies  Computer Age

Significant diversification

The 3 months correlation between GACM and Computer is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management 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 Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of GACM Technologies i.e., GACM Technologies and Computer Age go up and down completely randomly.

Pair Corralation between GACM Technologies and Computer Age

Assuming the 90 days trading horizon GACM Technologies Limited is expected to generate 0.7 times more return on investment than Computer Age. However, GACM Technologies Limited is 1.43 times less risky than Computer Age. It trades about -0.18 of its potential returns per unit of risk. Computer Age Management is currently generating about -0.12 per unit of risk. If you would invest  95.00  in GACM Technologies Limited on October 8, 2024 and sell it today you would lose (3.00) from holding GACM Technologies Limited or give up 3.16% of portfolio value over 90 days.

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

GACM Technologies Limited  vs.  Computer Age Management

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 inconsistent 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.

Computer Age Management

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Age Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Computer Age may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GACM Technologies and Computer Age

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

The idea behind GACM Technologies Limited and Computer Age Management 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.