Correlation Between GACM Technologies and DiGiSPICE Technologies

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

Diversification Opportunities for GACM Technologies and DiGiSPICE Technologies

0.31

Correlation Coefficient

GACM Technologies  DiGiSPICE Technologies

Weak diversification

The 3 months correlation between GACM and DiGiSPICE is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and DiGiSPICE Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiGiSPICE Technologies 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 DiGiSPICE Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiGiSPICE Technologies has no effect on the direction of GACM Technologies i.e., GACM Technologies and DiGiSPICE Technologies go up and down completely randomly.

Pair Corralation between GACM Technologies and DiGiSPICE Technologies

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the DiGiSPICE Technologies. But the stock apears to be less risky and, when comparing its historical volatility, GACM Technologies Limited is 1.07 times less risky than DiGiSPICE Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The DiGiSPICE Technologies Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,179  in DiGiSPICE Technologies Limited on October 8, 2024 and sell it today you would lose (85.00) from holding DiGiSPICE Technologies Limited or give up 2.67% of portfolio value over 90 days.

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

GACM Technologies Limited  vs.  DiGiSPICE Technologies Limited

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.

DiGiSPICE Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DiGiSPICE Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, DiGiSPICE Technologies is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GACM Technologies and DiGiSPICE Technologies

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

The idea behind GACM Technologies Limited and DiGiSPICE 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.