Correlation Between Gamma Communications and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and HSBC Holdings 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 HSBC Holdings 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 HSBC Holdings plc, you can compare the effects of market volatilities on Gamma Communications and HSBC Holdings 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 HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and HSBC Holdings.
Diversification Opportunities for Gamma Communications and HSBC Holdings
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gamma and HSBC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc 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 HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of Gamma Communications i.e., Gamma Communications and HSBC Holdings go up and down completely randomly.
Pair Corralation between Gamma Communications and HSBC Holdings
Assuming the 90 days horizon Gamma Communications is expected to generate 1.85 times less return on investment than HSBC Holdings. In addition to that, Gamma Communications is 1.41 times more volatile than HSBC Holdings plc. It trades about 0.03 of its total potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.08 per unit of volatility. If you would invest 568.00 in HSBC Holdings plc on October 23, 2024 and sell it today you would earn a total of 432.00 from holding HSBC Holdings plc or generate 76.06% 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. HSBC Holdings plc
Performance |
| Timeline |
| Gamma Communications plc |
| HSBC Holdings plc |
Gamma Communications and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and HSBC Holdings
The main advantage of trading using opposite Gamma Communications and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| Gamma Communications vs. T Mobile | Gamma Communications vs. China Mobile Limited | Gamma Communications vs. Verizon Communications | Gamma Communications vs. ATT Inc |
| HSBC Holdings vs. MagnaChip Semiconductor Corp | HSBC Holdings vs. ELMOS SEMICONDUCTOR | HSBC Holdings vs. Hua Hong Semiconductor | HSBC Holdings vs. Warner Music Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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