Correlation Between Gamma Communications and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Aedas Homes 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 Gamma Communications and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications plc and Aedas Homes SA, you can compare the effects of market volatilities on Gamma Communications and Aedas Homes 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 Gamma Communications with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Aedas Homes.
Diversification Opportunities for Gamma Communications and Aedas Homes
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gamma and Aedas is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA and Gamma Communications 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 Gamma Communications plc are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Gamma Communications i.e., Gamma Communications and Aedas Homes go up and down completely randomly.
Pair Corralation between Gamma Communications and Aedas Homes
Assuming the 90 days horizon Gamma Communications plc is expected to generate 0.81 times more return on investment than Aedas Homes. However, Gamma Communications plc is 1.24 times less risky than Aedas Homes. It trades about -0.03 of its potential returns per unit of risk. Aedas Homes SA is currently generating about -0.16 per unit of risk. If you would invest 1,890 in Gamma Communications plc on August 30, 2024 and sell it today you would lose (20.00) from holding Gamma Communications plc or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. Aedas Homes SA
Performance |
| Timeline |
| Gamma Communications plc |
| Aedas Homes SA |
Gamma Communications and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Aedas Homes
The main advantage of trading using opposite Gamma Communications and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Gamma Communications vs. KOOL2PLAY SA ZY | Gamma Communications vs. Q2M Managementberatung AG | Gamma Communications vs. CeoTronics AG | Gamma Communications vs. Cleanaway Waste Management |
| Aedas Homes vs. Titan Machinery | Aedas Homes vs. Federal Agricultural Mortgage | Aedas Homes vs. Chongqing Machinery Electric | Aedas Homes vs. Penta Ocean Construction Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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