Correlation Between GACM Technologies and Silly Monks

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

Diversification Opportunities for GACM Technologies and Silly Monks

0.17

Correlation Coefficient

GACM Technologies  Silly Monks

Average diversification

The 3 months correlation between GACM and Silly is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Silly Monks Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silly Monks Entertainment 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 Silly Monks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silly Monks Entertainment has no effect on the direction of GACM Technologies i.e., GACM Technologies and Silly Monks go up and down completely randomly.

Pair Corralation between GACM Technologies and Silly Monks

Assuming the 90 days trading horizon GACM Technologies Limited is expected to generate 0.54 times more return on investment than Silly Monks. However, GACM Technologies Limited is 1.85 times less risky than Silly Monks. It trades about 0.15 of its potential returns per unit of risk. Silly Monks Entertainment is currently generating about -0.08 per unit of risk. If you would invest  96.00  in GACM Technologies Limited on October 23, 2024 and sell it today you would earn a total of  4.00  from holding GACM Technologies Limited or generate 4.17% return on investment over 90 days.

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

GACM Technologies Limited  vs.  Silly Monks Entertainment

GACM Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GACM Technologies Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, GACM Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Silly Monks Entertainment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silly Monks Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Silly Monks displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GACM Technologies and Silly Monks

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

The idea behind GACM Technologies Limited and Silly Monks Entertainment 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..