Correlation Between Gamma Communications and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on Gamma Communications and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Deutsche Telekom.
Diversification Opportunities for Gamma Communications and Deutsche Telekom
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gamma and Deutsche is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of Gamma Communications i.e., Gamma Communications and Deutsche Telekom go up and down completely randomly.
Pair Corralation between Gamma Communications and Deutsche Telekom
Assuming the 90 days horizon Gamma Communications is expected to generate 2.89 times less return on investment than Deutsche Telekom. But when comparing it to its historical volatility, Gamma Communications plc is 1.49 times less risky than Deutsche Telekom. It trades about 0.09 of its potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,780 in Deutsche Telekom AG on September 3, 2024 and sell it today you would earn a total of 220.00 from holding Deutsche Telekom AG or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. Deutsche Telekom AG
Performance |
| Timeline |
| Gamma Communications plc |
| Deutsche Telekom |
Gamma Communications and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Deutsche Telekom
The main advantage of trading using opposite Gamma Communications and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| Gamma Communications vs. Hemisphere Energy Corp | Gamma Communications vs. NetSol Technologies | Gamma Communications vs. LG Display Co | Gamma Communications vs. Citic Telecom International |
| Deutsche Telekom vs. ADRIATIC METALS LS 013355 | Deutsche Telekom vs. ARDAGH METAL PACDL 0001 | Deutsche Telekom vs. United Natural Foods | Deutsche Telekom vs. Kaiser Aluminum |
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 Stocks Directory module to find actively traded stocks across global markets.
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