Correlation Between Gamma Communications and SAFETY MEDICAL
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and SAFETY MEDICAL 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 SAFETY MEDICAL 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 SAFETY MEDICAL PROD, you can compare the effects of market volatilities on Gamma Communications and SAFETY MEDICAL 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 SAFETY MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and SAFETY MEDICAL.
Diversification Opportunities for Gamma Communications and SAFETY MEDICAL
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gamma and SAFETY is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and SAFETY MEDICAL PROD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAFETY MEDICAL PROD 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 SAFETY MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAFETY MEDICAL PROD has no effect on the direction of Gamma Communications i.e., Gamma Communications and SAFETY MEDICAL go up and down completely randomly.
Pair Corralation between Gamma Communications and SAFETY MEDICAL
Assuming the 90 days horizon Gamma Communications plc is expected to generate 0.36 times more return on investment than SAFETY MEDICAL. However, Gamma Communications plc is 2.74 times less risky than SAFETY MEDICAL. It trades about -0.12 of its potential returns per unit of risk. SAFETY MEDICAL PROD is currently generating about -0.25 per unit of risk. If you would invest 1,930 in Gamma Communications plc on September 1, 2024 and sell it today you would lose (70.00) from holding Gamma Communications plc or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. SAFETY MEDICAL PROD
Performance |
| Timeline |
| Gamma Communications plc |
| SAFETY MEDICAL PROD |
Gamma Communications and SAFETY MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and SAFETY MEDICAL
The main advantage of trading using opposite Gamma Communications and SAFETY MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, SAFETY MEDICAL 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 SAFETY MEDICAL will offset losses from the drop in SAFETY MEDICAL's long position.| Gamma Communications vs. Games Workshop Group | Gamma Communications vs. Penn National Gaming | Gamma Communications vs. Zijin Mining Group | Gamma Communications vs. QINGCI GAMES INC |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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