Correlation Between Gamma Communications and Stewart Information
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Stewart Information 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 Stewart Information 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 Stewart Information Services, you can compare the effects of market volatilities on Gamma Communications and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Stewart Information.
Diversification Opportunities for Gamma Communications and Stewart Information
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gamma and Stewart is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Gamma Communications i.e., Gamma Communications and Stewart Information go up and down completely randomly.
Pair Corralation between Gamma Communications and Stewart Information
Assuming the 90 days horizon Gamma Communications plc is expected to under-perform the Stewart Information. But the stock apears to be less risky and, when comparing its historical volatility, Gamma Communications plc is 1.38 times less risky than Stewart Information. The stock trades about -0.02 of its potential returns per unit of risk. The Stewart Information Services is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,350 in Stewart Information Services on August 29, 2024 and sell it today you would earn a total of 650.00 from holding Stewart Information Services or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. Stewart Information Services
Performance |
| Timeline |
| Gamma Communications plc |
| Stewart Information |
Gamma Communications and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Stewart Information
The main advantage of trading using opposite Gamma Communications and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information'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 |
| Stewart Information vs. PICC Property and | Stewart Information vs. QBE Insurance Group | Stewart Information vs. Superior Plus Corp | Stewart Information vs. SIVERS SEMICONDUCTORS AB |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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