Correlation Between GACM Technologies and Garware Technical

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

Diversification Opportunities for GACM Technologies and Garware Technical

-0.13

Correlation Coefficient

GACM Technologies  Garware Technical

Good diversification

The 3 months correlation between GACM and Garware is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Garware Technical Fibres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Technical Fibres 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 Garware Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Technical Fibres has no effect on the direction of GACM Technologies i.e., GACM Technologies and Garware Technical go up and down completely randomly.

Pair Corralation between GACM Technologies and Garware Technical

Assuming the 90 days trading horizon GACM Technologies Limited is expected to generate 0.33 times more return on investment than Garware Technical. However, GACM Technologies Limited is 3.06 times less risky than Garware Technical. It trades about -0.18 of its potential returns per unit of risk. Garware Technical Fibres is currently generating about -0.19 per unit of risk. If you would invest  95.00  in GACM Technologies Limited on October 9, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GACM Technologies Limited  vs.  Garware Technical Fibres

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

Garware Technical Fibres

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Technical Fibres are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Garware Technical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GACM Technologies and Garware Technical

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

The idea behind GACM Technologies Limited and Garware Technical Fibres 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.