Correlation Between GACM Technologies and Sapphire Foods

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

Diversification Opportunities for GACM Technologies and Sapphire Foods

0.61

Correlation Coefficient

GACM Technologies  Sapphire Foods

Poor diversification

The 3 months correlation between GACM and Sapphire is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Sapphire Foods India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapphire Foods India 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 Sapphire Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapphire Foods India has no effect on the direction of GACM Technologies i.e., GACM Technologies and Sapphire Foods go up and down completely randomly.

Pair Corralation between GACM Technologies and Sapphire Foods

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the Sapphire Foods. But the stock apears to be less risky and, when comparing its historical volatility, GACM Technologies Limited is 6.85 times less risky than Sapphire Foods. The stock trades about -0.23 of its potential returns per unit of risk. The Sapphire Foods India is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  27,995  in Sapphire Foods India on September 23, 2024 and sell it today you would earn a total of  3,180  from holding Sapphire Foods India or generate 11.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.62%
Values	Daily Returns

GACM Technologies Limited  vs.  Sapphire Foods India

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.

Sapphire Foods India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapphire Foods India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with GACM Technologies and Sapphire Foods

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

The idea behind GACM Technologies Limited and Sapphire Foods India 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.