Correlation Between United Internet and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both United Internet and Gamma Communications 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 United Internet and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and Gamma Communications PLC, you can compare the effects of market volatilities on United Internet and Gamma Communications 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 United Internet with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Gamma Communications.
Diversification Opportunities for United Internet and Gamma Communications
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Gamma is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC and United Internet 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 United Internet AG are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of United Internet i.e., United Internet and Gamma Communications go up and down completely randomly.
Pair Corralation between United Internet and Gamma Communications
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Gamma Communications. In addition to that, United Internet is 3.08 times more volatile than Gamma Communications PLC. It trades about -0.25 of its total potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.01 per unit of volatility. If you would invest 158,200 in Gamma Communications PLC on August 30, 2024 and sell it today you would lose (600.00) from holding Gamma Communications PLC or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. Gamma Communications PLC
Performance |
| Timeline |
| United Internet AG |
| Gamma Communications PLC |
United Internet and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Gamma Communications
The main advantage of trading using opposite United Internet and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| United Internet vs. Lendinvest PLC | United Internet vs. Neometals | United Internet vs. Albion Technology General | United Internet vs. Jupiter Fund Management |
| Gamma Communications vs. Walmart | Gamma Communications vs. BYD Co | Gamma Communications vs. Volkswagen AG | Gamma Communications vs. Volkswagen AG Non Vtg |
Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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