Correlation Between X FAB and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both X FAB 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 X FAB and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Gamma Communications PLC, you can compare the effects of market volatilities on X FAB 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 X FAB with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Gamma Communications.
Diversification Opportunities for X FAB and Gamma Communications
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0ROZ and Gamma is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries 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 X FAB 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 X FAB Silicon Foundries 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 X FAB i.e., X FAB and Gamma Communications go up and down completely randomly.
Pair Corralation between X FAB and Gamma Communications
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Gamma Communications. In addition to that, X FAB is 2.31 times more volatile than Gamma Communications PLC. It trades about -0.14 of its total potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.05 per unit of volatility. If you would invest 160,400 in Gamma Communications PLC on August 26, 2024 and sell it today you would lose (2,000) from holding Gamma Communications PLC or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Gamma Communications PLC
Performance |
| Timeline |
| X FAB Silicon |
| Gamma Communications PLC |
X FAB and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Gamma Communications
The main advantage of trading using opposite X FAB and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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.| X FAB vs. Samsung Electronics Co | X FAB vs. Samsung Electronics Co | X FAB vs. Hyundai Motor | X FAB vs. Toyota Motor Corp |
| Gamma Communications vs. Ryanair Holdings plc | Gamma Communications vs. Dentsply Sirona | Gamma Communications vs. Zanaga Iron Ore | Gamma Communications vs. Mindflair Plc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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