Correlation Between GACM Technologies and City Union

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

Diversification Opportunities for GACM Technologies and City Union

-0.23

Correlation Coefficient

GACM Technologies  City Union

Very good diversification

The 3 months correlation between GACM and City is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and City Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Union Bank 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 City Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Union Bank has no effect on the direction of GACM Technologies i.e., GACM Technologies and City Union go up and down completely randomly.

Pair Corralation between GACM Technologies and City Union

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the City Union. In addition to that, GACM Technologies is 1.79 times more volatile than City Union Bank. It trades about -0.21 of its total potential returns per unit of risk. City Union Bank is currently generating about 0.06 per unit of volatility. If you would invest  12,582  in City Union Bank on September 26, 2024 and sell it today you would earn a total of  4,877  from holding City Union Bank or generate 38.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.67%
Values	Daily Returns

GACM Technologies Limited  vs.  City Union Bank

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 conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

City Union Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in City Union Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, City Union may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GACM Technologies and City Union

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

The idea behind GACM Technologies Limited and City Union Bank 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..