Correlation Between GACM Technologies and Sarveshwar Foods

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

Diversification Opportunities for GACM Technologies and Sarveshwar Foods

0.41

Correlation Coefficient

GACM Technologies  Sarveshwar Foods

Very weak diversification

The 3 months correlation between GACM and Sarveshwar is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Sarveshwar Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarveshwar Foods 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 Sarveshwar Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarveshwar Foods has no effect on the direction of GACM Technologies i.e., GACM Technologies and Sarveshwar Foods go up and down completely randomly.

Pair Corralation between GACM Technologies and Sarveshwar Foods

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the Sarveshwar Foods. But the stock apears to be less risky and, when comparing its historical volatility, GACM Technologies Limited is 13.62 times less risky than Sarveshwar Foods. The stock trades about -0.2 of its potential returns per unit of risk. The Sarveshwar Foods Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  258.00  in Sarveshwar Foods Limited on October 5, 2024 and sell it today you would earn a total of  621.00  from holding Sarveshwar Foods Limited or generate 240.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	82.43%
Values	Daily Returns

GACM Technologies Limited  vs.  Sarveshwar Foods Limited

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 rather sound fundamental indicators, GACM Technologies is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sarveshwar Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarveshwar Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sarveshwar Foods is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GACM Technologies and Sarveshwar Foods

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

The idea behind GACM Technologies Limited and Sarveshwar Foods Limited 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.