Correlation Between Niraj Ispat and GACM Technologies

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

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

Diversification Opportunities for Niraj Ispat and GACM Technologies

-0.07

Correlation Coefficient

Niraj Ispat  GACM Technologies

Good diversification

The 3 months correlation between Niraj and GACM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Niraj Ispat Industries and GACM Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GACM Technologies and Niraj Ispat 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 Niraj Ispat Industries 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 Niraj Ispat i.e., Niraj Ispat and GACM Technologies go up and down completely randomly.

Pair Corralation between Niraj Ispat and GACM Technologies

Assuming the 90 days trading horizon Niraj Ispat Industries is expected to generate 0.85 times more return on investment than GACM Technologies. However, Niraj Ispat Industries is 1.18 times less risky than GACM Technologies. It trades about 0.06 of its potential returns per unit of risk. GACM Technologies Limited is currently generating about -0.19 per unit of risk. If you would invest  11,200  in Niraj Ispat Industries on October 20, 2024 and sell it today you would earn a total of  13,033  from holding Niraj Ispat Industries or generate 116.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.89%
Values	Daily Returns

Niraj Ispat Industries  vs.  GACM Technologies Limited

Niraj Ispat Industries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Niraj Ispat unveiled solid returns over the last few months and may actually be approaching a breakup point.

GACM Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

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 weak fundamental indicators, GACM Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Niraj Ispat and GACM Technologies

The main advantage of trading using opposite Niraj Ispat and GACM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niraj Ispat 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 Niraj Ispat Industries 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.