Correlation Between Ping An and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Ping An 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 Ping An and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ping An Healthcare and Gamma Communications plc, you can compare the effects of market volatilities on Ping An 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 Ping An with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Gamma Communications.
Diversification Opportunities for Ping An and Gamma Communications
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ping and Gamma is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Healthcare 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 Ping An 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 Ping An Healthcare 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 Ping An i.e., Ping An and Gamma Communications go up and down completely randomly.
Pair Corralation between Ping An and Gamma Communications
Assuming the 90 days horizon Ping An Healthcare is expected to under-perform the Gamma Communications. In addition to that, Ping An is 1.39 times more volatile than Gamma Communications plc. It trades about -0.02 of its total potential returns per unit of risk. Gamma Communications plc is currently generating about 0.06 per unit of volatility. If you would invest 1,135 in Gamma Communications plc on September 4, 2024 and sell it today you would earn a total of 815.00 from holding Gamma Communications plc or generate 71.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ping An Healthcare vs. Gamma Communications plc
Performance |
| Timeline |
| Ping An Healthcare |
| Gamma Communications plc |
Ping An and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Gamma Communications
The main advantage of trading using opposite Ping An and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An 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.The idea behind Ping An Healthcare and Gamma Communications plc 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.| Gamma Communications vs. T Mobile | Gamma Communications vs. China Mobile Limited | Gamma Communications vs. ATT Inc | Gamma Communications vs. Nippon Telegraph and |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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