Correlation Between Innova Captab and GACM Technologies

Can any of the company-specific risk be diversified away by investing in both Innova Captab and GACM Technologies 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 Innova Captab and GACM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innova Captab Limited and GACM Technologies Limited, you can compare the effects of market volatilities on Innova Captab and GACM Technologies 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 Innova Captab with a short position of GACM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innova Captab and GACM Technologies.

Diversification Opportunities for Innova Captab and GACM Technologies

-0.28

Correlation Coefficient

Innova Captab  GACM Technologies

Very good diversification

The 3 months correlation between Innova and GACM is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Innova Captab Limited and GACM Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GACM Technologies and Innova Captab 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 Innova Captab Limited are associated (or correlated) with GACM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GACM Technologies has no effect on the direction of Innova Captab i.e., Innova Captab and GACM Technologies go up and down completely randomly.

Pair Corralation between Innova Captab and GACM Technologies

Assuming the 90 days trading horizon Innova Captab Limited is expected to generate 0.76 times more return on investment than GACM Technologies. However, Innova Captab Limited is 1.32 times less risky than GACM Technologies. It trades about 0.11 of its potential returns per unit of risk. GACM Technologies Limited is currently generating about -0.2 per unit of risk. If you would invest  54,140  in Innova Captab Limited on October 15, 2024 and sell it today you would earn a total of  47,430  from holding Innova Captab Limited or generate 87.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.63%
Values	Daily Returns

Innova Captab Limited  vs.  GACM Technologies Limited

Innova Captab Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innova Captab Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Innova Captab exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 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.

Pair Trading with Innova Captab and GACM Technologies

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

The idea behind Innova Captab Limited and GACM Technologies 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 Anywhere module to track or share privately all of your investments from the convenience of any device.