Correlation Between GACM Technologies and V2 Retail

Can any of the company-specific risk be diversified away by investing in both GACM Technologies and V2 Retail 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 V2 Retail 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 V2 Retail Limited, you can compare the effects of market volatilities on GACM Technologies and V2 Retail 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 V2 Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of GACM Technologies and V2 Retail.

Diversification Opportunities for GACM Technologies and V2 Retail

0.46

Correlation Coefficient

GACM Technologies  V2 Retail

Very weak diversification

The 3 months correlation between GACM and V2RETAIL is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and V2 Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2 Retail 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 V2 Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2 Retail Limited has no effect on the direction of GACM Technologies i.e., GACM Technologies and V2 Retail go up and down completely randomly.

Pair Corralation between GACM Technologies and V2 Retail

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the V2 Retail. But the stock apears to be less risky and, when comparing its historical volatility, GACM Technologies Limited is 1.69 times less risky than V2 Retail. The stock trades about -0.08 of its potential returns per unit of risk. The V2 Retail Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  162,685  in V2 Retail Limited on December 27, 2024 and sell it today you would earn a total of  7,810  from holding V2 Retail Limited or generate 4.8% 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.  V2 Retail Limited

GACM Technologies

Risk-Adjusted Performance

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 weak 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.

V2 Retail Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, V2 Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GACM Technologies and V2 Retail

The main advantage of trading using opposite GACM Technologies and V2 Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GACM Technologies position performs unexpectedly, V2 Retail 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 V2 Retail will offset losses from the drop in V2 Retail's long position.

The idea behind GACM Technologies Limited and V2 Retail 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.