Correlation Between GACM Technologies and Lakshmi Finance

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

Diversification Opportunities for GACM Technologies and Lakshmi Finance

-0.28

Correlation Coefficient

GACM Technologies  Lakshmi Finance

Very good diversification

The 3 months correlation between GACM and Lakshmi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Lakshmi Finance Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakshmi Finance Indu 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 Lakshmi Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakshmi Finance Indu has no effect on the direction of GACM Technologies i.e., GACM Technologies and Lakshmi Finance go up and down completely randomly.

Pair Corralation between GACM Technologies and Lakshmi Finance

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the Lakshmi Finance. But the stock apears to be less risky and, when comparing its historical volatility, GACM Technologies Limited is 1.27 times less risky than Lakshmi Finance. The stock trades about -0.3 of its potential returns per unit of risk. The Lakshmi Finance Industrial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  22,721  in Lakshmi Finance Industrial on September 3, 2024 and sell it today you would earn a total of  679.00  from holding Lakshmi Finance Industrial or generate 2.99% return on investment over 90 days.

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

GACM Technologies Limited  vs.  Lakshmi Finance Industrial

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 weak 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.

Lakshmi Finance Indu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lakshmi Finance Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Lakshmi Finance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GACM Technologies and Lakshmi Finance

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

The idea behind GACM Technologies Limited and Lakshmi Finance Industrial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.