Correlation Between GACM Technologies and Karur Vysya

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

Diversification Opportunities for GACM Technologies and Karur Vysya

-0.16

Correlation Coefficient

GACM Technologies  Karur Vysya

Good diversification

The 3 months correlation between GACM and Karur is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Karur Vysya Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karur Vysya Bank 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 Karur Vysya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karur Vysya Bank has no effect on the direction of GACM Technologies i.e., GACM Technologies and Karur Vysya go up and down completely randomly.

Pair Corralation between GACM Technologies and Karur Vysya

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the Karur Vysya. In addition to that, GACM Technologies is 1.72 times more volatile than Karur Vysya Bank. It trades about -0.28 of its total potential returns per unit of risk. Karur Vysya Bank is currently generating about -0.02 per unit of volatility. If you would invest  22,924  in Karur Vysya Bank on September 28, 2024 and sell it today you would lose (1,328) from holding Karur Vysya Bank or give up 5.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.04%
Values	Daily Returns

GACM Technologies Limited  vs.  Karur Vysya Bank

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 rather sound fundamental indicators, GACM Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Karur Vysya Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Karur Vysya Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Karur Vysya is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GACM Technologies and Karur Vysya

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

The idea behind GACM Technologies Limited and Karur Vysya Bank 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.