Correlation Between Investment Trust and GACM Technologies

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

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

Diversification Opportunities for Investment Trust and GACM Technologies

-0.03

Correlation Coefficient

Investment Trust  GACM Technologies

Good diversification

The 3 months correlation between Investment and GACM is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Investment Trust and GACM Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GACM Technologies and Investment Trust 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 The Investment Trust 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 Investment Trust i.e., Investment Trust and GACM Technologies go up and down completely randomly.

Pair Corralation between Investment Trust and GACM Technologies

Assuming the 90 days trading horizon The Investment Trust is expected to under-perform the GACM Technologies. But the stock apears to be less risky and, when comparing its historical volatility, The Investment Trust is 1.02 times less risky than GACM Technologies. The stock trades about -0.12 of its potential returns per unit of risk. The GACM Technologies Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  89.00  in GACM Technologies Limited on October 25, 2024 and sell it today you would earn a total of  6.00  from holding GACM Technologies Limited or generate 6.74% return on investment over 90 days.

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

The Investment Trust  vs.  GACM Technologies Limited

Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Investment Trust and GACM Technologies

The main advantage of trading using opposite Investment Trust and GACM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment Trust 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 The Investment Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.