Correlation Between GACM Technologies and Mcnally Bharat

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

Diversification Opportunities for GACM Technologies and Mcnally Bharat

0.36

Correlation Coefficient

GACM Technologies  Mcnally Bharat

Weak diversification

The 3 months correlation between GACM and Mcnally is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Mcnally Bharat Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcnally Bharat Engin 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 Mcnally Bharat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcnally Bharat Engin has no effect on the direction of GACM Technologies i.e., GACM Technologies and Mcnally Bharat go up and down completely randomly.

Pair Corralation between GACM Technologies and Mcnally Bharat

Assuming the 90 days trading horizon GACM Technologies Limited is expected to generate 0.16 times more return on investment than Mcnally Bharat. However, GACM Technologies Limited is 6.29 times less risky than Mcnally Bharat. It trades about -0.06 of its potential returns per unit of risk. Mcnally Bharat Engineering is currently generating about -0.17 per unit of risk. If you would invest  93.00  in GACM Technologies Limited on December 25, 2024 and sell it today you would lose (7.00) from holding GACM Technologies Limited or give up 7.53% 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.  Mcnally Bharat Engineering

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 latest weak 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.

Mcnally Bharat Engin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mcnally Bharat Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GACM Technologies and Mcnally Bharat

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

The idea behind GACM Technologies Limited and Mcnally Bharat Engineering 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.