Correlation Between GACM Technologies and Waaree Energies

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

Diversification Opportunities for GACM Technologies and Waaree Energies

0.2

Correlation Coefficient

GACM Technologies  Waaree Energies

Modest diversification

The 3 months correlation between GACM and Waaree is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Waaree Energies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waaree Energies 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 Waaree Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waaree Energies has no effect on the direction of GACM Technologies i.e., GACM Technologies and Waaree Energies go up and down completely randomly.

Pair Corralation between GACM Technologies and Waaree Energies

Assuming the 90 days trading horizon GACM Technologies Limited is expected to generate 0.56 times more return on investment than Waaree Energies. However, GACM Technologies Limited is 1.77 times less risky than Waaree Energies. It trades about 0.04 of its potential returns per unit of risk. Waaree Energies Limited is currently generating about -0.27 per unit of risk. If you would invest  94.00  in GACM Technologies Limited on October 25, 2024 and sell it today you would earn a total of  1.00  from holding GACM Technologies Limited or generate 1.06% return on investment over 90 days.

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

GACM Technologies Limited  vs.  Waaree Energies Limited

GACM Technologies

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GACM Technologies Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, GACM Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Waaree Energies

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waaree Energies Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Waaree Energies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GACM Technologies and Waaree Energies

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

The idea behind GACM Technologies Limited and Waaree Energies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.