Correlation Between GACM Technologies and Emcure Pharmaceuticals

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

Diversification Opportunities for GACM Technologies and Emcure Pharmaceuticals

0.61

Correlation Coefficient

GACM Technologies  Emcure Pharmaceuticals

Poor diversification

The 3 months correlation between GACM and Emcure is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Emcure Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emcure Pharmaceuticals 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 Emcure Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emcure Pharmaceuticals has no effect on the direction of GACM Technologies i.e., GACM Technologies and Emcure Pharmaceuticals go up and down completely randomly.

Pair Corralation between GACM Technologies and Emcure Pharmaceuticals

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the Emcure Pharmaceuticals. In addition to that, GACM Technologies is 1.29 times more volatile than Emcure Pharmaceuticals. It trades about -0.04 of its total potential returns per unit of risk. Emcure Pharmaceuticals is currently generating about -0.01 per unit of volatility. If you would invest  145,625  in Emcure Pharmaceuticals on September 27, 2024 and sell it today you would lose (3,555) from holding Emcure Pharmaceuticals or give up 2.44% of portfolio value over 90 days.

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

GACM Technologies Limited  vs.  Emcure Pharmaceuticals

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.

Emcure Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emcure Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Emcure Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GACM Technologies and Emcure Pharmaceuticals

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

The idea behind GACM Technologies Limited and Emcure Pharmaceuticals 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..