Correlation Between GACM Technologies and Suzlon Energy

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

Diversification Opportunities for GACM Technologies and Suzlon Energy

0.82

Correlation Coefficient

GACM Technologies  Suzlon Energy

Very poor diversification

The 3 months correlation between GACM and Suzlon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Suzlon Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzlon Energy Limited 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 Suzlon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzlon Energy Limited has no effect on the direction of GACM Technologies i.e., GACM Technologies and Suzlon Energy go up and down completely randomly.

Pair Corralation between GACM Technologies and Suzlon Energy

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the Suzlon Energy. In addition to that, GACM Technologies is 1.13 times more volatile than Suzlon Energy Limited. It trades about -0.1 of its total potential returns per unit of risk. Suzlon Energy Limited is currently generating about -0.11 per unit of volatility. If you would invest  8,200  in Suzlon Energy Limited on September 17, 2024 and sell it today you would lose (1,580) from holding Suzlon Energy Limited or give up 19.27% of portfolio value over 90 days.

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

GACM Technologies Limited  vs.  Suzlon Energy 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 conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Suzlon Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzlon Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GACM Technologies and Suzlon Energy

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

The idea behind GACM Technologies Limited and Suzlon Energy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.