Correlation Between Gamma Communications and British American
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on Gamma Communications and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and British American.
Diversification Opportunities for Gamma Communications and British American
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gamma and British is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Gamma Communications i.e., Gamma Communications and British American go up and down completely randomly.
Pair Corralation between Gamma Communications and British American
Assuming the 90 days horizon Gamma Communications is expected to generate 1.79 times less return on investment than British American. In addition to that, Gamma Communications is 1.89 times more volatile than British American Tobacco. It trades about 0.05 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.18 per unit of volatility. If you would invest 2,778 in British American Tobacco on September 5, 2024 and sell it today you would earn a total of 770.00 from holding British American Tobacco or generate 27.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Gamma Communications plc vs. British American Tobacco
Performance |
| Timeline |
| Gamma Communications plc |
| British American Tobacco |
Gamma Communications and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and British American
The main advantage of trading using opposite Gamma Communications and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Gamma Communications vs. Virtus Investment Partners | Gamma Communications vs. CDL INVESTMENT | Gamma Communications vs. Salesforce | Gamma Communications vs. Strategic Investments AS |
| British American vs. British American Tobacco | British American vs. JAPAN TOBACCO UNSPADR12 | British American vs. Imperial Brands 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |