Correlation Between GACM Technologies and Shankara Building

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

Diversification Opportunities for GACM Technologies and Shankara Building

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between GACM and Shankara is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GACM Technologies Limited and Shankara Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shankara Building 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 Shankara Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shankara Building has no effect on the direction of GACM Technologies i.e., GACM Technologies and Shankara Building go up and down completely randomly.

Pair Corralation between GACM Technologies and Shankara Building

Assuming the 90 days trading horizon GACM Technologies Limited is expected to generate 0.53 times more return on investment than Shankara Building. However, GACM Technologies Limited is 1.87 times less risky than Shankara Building. It trades about 0.11 of its potential returns per unit of risk. Shankara Building Products is currently generating about -0.11 per unit of risk. If you would invest  98.00  in GACM Technologies Limited on October 21, 2024 and sell it today you would earn a total of  3.00  from holding GACM Technologies Limited or generate 3.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

GACM Technologies Limited  vs.  Shankara Building Products

 Performance 
       Timeline  
GACM Technologies 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
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 unfluctuating fundamental indicators, GACM Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Shankara Building 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Shankara Building Products are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Shankara Building reported solid returns over the last few months and may actually be approaching a breakup point.

GACM Technologies and Shankara Building Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GACM Technologies and Shankara Building

The main advantage of trading using opposite GACM Technologies and Shankara Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GACM Technologies position performs unexpectedly, Shankara Building 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 Shankara Building will offset losses from the drop in Shankara Building's long position.
The idea behind GACM Technologies Limited and Shankara Building Products 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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