Correlation Between Gamma Communications and Zhongsheng Group
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Zhongsheng Group 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 Zhongsheng Group 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 Zhongsheng Group Holdings, you can compare the effects of market volatilities on Gamma Communications and Zhongsheng Group 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 Zhongsheng Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Zhongsheng Group.
Diversification Opportunities for Gamma Communications and Zhongsheng Group
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gamma and Zhongsheng is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Zhongsheng Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongsheng Group Holdings 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 Zhongsheng Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongsheng Group Holdings has no effect on the direction of Gamma Communications i.e., Gamma Communications and Zhongsheng Group go up and down completely randomly.
Pair Corralation between Gamma Communications and Zhongsheng Group
Assuming the 90 days horizon Gamma Communications is expected to generate 2.48 times less return on investment than Zhongsheng Group. But when comparing it to its historical volatility, Gamma Communications plc is 2.82 times less risky than Zhongsheng Group. It trades about 0.04 of its potential returns per unit of risk. Zhongsheng Group Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 129.00 in Zhongsheng Group Holdings on November 29, 2024 and sell it today you would earn a total of 36.00 from holding Zhongsheng Group Holdings or generate 27.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gamma Communications plc vs. Zhongsheng Group Holdings
Performance |
| Timeline |
| Gamma Communications plc |
| Zhongsheng Group Holdings |
Gamma Communications and Zhongsheng Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Zhongsheng Group
The main advantage of trading using opposite Gamma Communications and Zhongsheng Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Zhongsheng Group 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 Zhongsheng Group will offset losses from the drop in Zhongsheng Group's long position.| Gamma Communications vs. SCIENCE IN SPORT | Gamma Communications vs. Salesforce | Gamma Communications vs. DICKS Sporting Goods | Gamma Communications vs. COLUMBIA SPORTSWEAR |
| Zhongsheng Group vs. Copart Inc | Zhongsheng Group vs. Penske Automotive Group | Zhongsheng Group vs. USS Co | Zhongsheng Group vs. Superior Plus Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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