Correlation Between GACM Technologies and JB Chemicals

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

Diversification Opportunities for GACM Technologies and JB Chemicals

0.57

Correlation Coefficient

GACM Technologies  JB Chemicals

Very weak diversification

The 3 months correlation between GACM and JBCHEPHARM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and JB Chemicals Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Chemicals Pharmac 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 JB Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Chemicals Pharmac has no effect on the direction of GACM Technologies i.e., GACM Technologies and JB Chemicals go up and down completely randomly.

Pair Corralation between GACM Technologies and JB Chemicals

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the JB Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, GACM Technologies Limited is 1.18 times less risky than JB Chemicals. The stock trades about -0.17 of its potential returns per unit of risk. The JB Chemicals Pharmaceuticals is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  180,501  in JB Chemicals Pharmaceuticals on December 4, 2024 and sell it today you would lose (20,626) from holding JB Chemicals Pharmaceuticals or give up 11.43% of portfolio value over 90 days.

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

GACM Technologies Limited  vs.  JB Chemicals Pharmaceuticals

GACM Technologies

Risk-Adjusted Performance

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

JB Chemicals Pharmac

Risk-Adjusted Performance

Very Weak

Over the last 90 days JB Chemicals Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with GACM Technologies and JB Chemicals

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

The idea behind GACM Technologies Limited and JB Chemicals 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.