Correlation Between GACM Technologies and Ravi Kumar

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

Diversification Opportunities for GACM Technologies and Ravi Kumar

0.42

Correlation Coefficient

GACM Technologies  Ravi Kumar

Very weak diversification

The 3 months correlation between GACM and Ravi is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Ravi Kumar Distilleries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ravi Kumar Distilleries 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 Ravi Kumar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ravi Kumar Distilleries has no effect on the direction of GACM Technologies i.e., GACM Technologies and Ravi Kumar go up and down completely randomly.

Pair Corralation between GACM Technologies and Ravi Kumar

Assuming the 90 days trading horizon GACM Technologies Limited is expected to generate 1.19 times more return on investment than Ravi Kumar. However, GACM Technologies is 1.19 times more volatile than Ravi Kumar Distilleries. It trades about 0.21 of its potential returns per unit of risk. Ravi Kumar Distilleries is currently generating about 0.23 per unit of risk. If you would invest  86.00  in GACM Technologies Limited on September 27, 2024 and sell it today you would earn a total of  8.00  from holding GACM Technologies Limited or generate 9.3% return on investment over 90 days.

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

GACM Technologies Limited  vs.  Ravi Kumar Distilleries

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.

Ravi Kumar Distilleries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ravi Kumar Distilleries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ravi Kumar is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GACM Technologies and Ravi Kumar

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

The idea behind GACM Technologies Limited and Ravi Kumar Distilleries 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.