Correlation Between GACM Technologies and Vardhman Holdings

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

Diversification Opportunities for GACM Technologies and Vardhman Holdings

-0.57

Correlation Coefficient

GACM Technologies  Vardhman Holdings

Excellent diversification

The 3 months correlation between GACM and Vardhman is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Vardhman Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vardhman Holdings 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 Vardhman Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vardhman Holdings has no effect on the direction of GACM Technologies i.e., GACM Technologies and Vardhman Holdings go up and down completely randomly.

Pair Corralation between GACM Technologies and Vardhman Holdings

Assuming the 90 days trading horizon GACM Technologies Limited is expected to under-perform the Vardhman Holdings. But the stock apears to be less risky and, when comparing its historical volatility, GACM Technologies Limited is 1.59 times less risky than Vardhman Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The Vardhman Holdings Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  418,425  in Vardhman Holdings Limited on September 23, 2024 and sell it today you would earn a total of  37,175  from holding Vardhman Holdings Limited or generate 8.88% return on investment over 90 days.

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

GACM Technologies Limited  vs.  Vardhman Holdings Limited

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 conflicting 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.

Vardhman Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vardhman Holdings Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Vardhman Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GACM Technologies and Vardhman Holdings

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

The idea behind GACM Technologies Limited and Vardhman Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.