Correlation Between Gamma Communications and Platinum Investment
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Platinum Investment 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 Platinum Investment 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 Platinum Investment Management, you can compare the effects of market volatilities on Gamma Communications and Platinum Investment 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 Platinum Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Platinum Investment.
Diversification Opportunities for Gamma Communications and Platinum Investment
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gamma and Platinum is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of Gamma Communications i.e., Gamma Communications and Platinum Investment go up and down completely randomly.
Pair Corralation between Gamma Communications and Platinum Investment
Assuming the 90 days horizon Gamma Communications plc is expected to generate 1.07 times more return on investment than Platinum Investment. However, Gamma Communications is 1.07 times more volatile than Platinum Investment Management. It trades about -0.01 of its potential returns per unit of risk. Platinum Investment Management is currently generating about -0.42 per unit of risk. If you would invest 1,890 in Gamma Communications plc on August 30, 2024 and sell it today you would lose (10.00) from holding Gamma Communications plc or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. Platinum Investment Management
Performance |
| Timeline |
| Gamma Communications plc |
| Platinum Investment |
Gamma Communications and Platinum Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Platinum Investment
The main advantage of trading using opposite Gamma Communications and Platinum Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Platinum Investment 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 Platinum Investment will offset losses from the drop in Platinum Investment's long position.| Gamma Communications vs. DATANG INTL POW | Gamma Communications vs. China Datang | Gamma Communications vs. NTT DATA | Gamma Communications vs. NXP Semiconductors NV |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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