Correlation Between Gamma Communications and Fuyao Glass
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Fuyao Glass 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 Fuyao Glass 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 Fuyao Glass Industry, you can compare the effects of market volatilities on Gamma Communications and Fuyao Glass 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 Fuyao Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Fuyao Glass.
Diversification Opportunities for Gamma Communications and Fuyao Glass
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gamma and Fuyao is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Fuyao Glass Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuyao Glass Industry 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 Fuyao Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuyao Glass Industry has no effect on the direction of Gamma Communications i.e., Gamma Communications and Fuyao Glass go up and down completely randomly.
Pair Corralation between Gamma Communications and Fuyao Glass
Assuming the 90 days horizon Gamma Communications plc is expected to generate 1.0 times more return on investment than Fuyao Glass. However, Gamma Communications plc is 1.0 times less risky than Fuyao Glass. It trades about 0.16 of its potential returns per unit of risk. Fuyao Glass Industry is currently generating about -0.07 per unit of risk. If you would invest 1,860 in Gamma Communications plc on September 2, 2024 and sell it today you would earn a total of 90.00 from holding Gamma Communications plc or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. Fuyao Glass Industry
Performance |
| Timeline |
| Gamma Communications plc |
| Fuyao Glass Industry |
Gamma Communications and Fuyao Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Fuyao Glass
The main advantage of trading using opposite Gamma Communications and Fuyao Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Fuyao Glass 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 Fuyao Glass will offset losses from the drop in Fuyao Glass' long position.| Gamma Communications vs. BJs Wholesale Club | Gamma Communications vs. ARDAGH METAL PACDL 0001 | Gamma Communications vs. Lendlease Group | Gamma Communications vs. PARKEN Sport Entertainment |
| Fuyao Glass vs. PT Astra International | Fuyao Glass vs. Superior Plus Corp | Fuyao Glass vs. NMI Holdings | Fuyao Glass vs. Origin Agritech |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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