Correlation Between Gamma Communications and United Internet
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and United Internet 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 United Internet 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 United Internet AG, you can compare the effects of market volatilities on Gamma Communications and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and United Internet.
Diversification Opportunities for Gamma Communications and United Internet
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gamma and United is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Gamma Communications i.e., Gamma Communications and United Internet go up and down completely randomly.
Pair Corralation between Gamma Communications and United Internet
Assuming the 90 days horizon Gamma Communications plc is expected to generate 0.95 times more return on investment than United Internet. However, Gamma Communications plc is 1.06 times less risky than United Internet. It trades about 0.05 of its potential returns per unit of risk. United Internet AG is currently generating about -0.02 per unit of risk. If you would invest 1,232 in Gamma Communications plc on September 28, 2024 and sell it today you would earn a total of 628.00 from holding Gamma Communications plc or generate 50.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. United Internet AG
Performance |
| Timeline |
| Gamma Communications plc |
| United Internet AG |
Gamma Communications and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and United Internet
The main advantage of trading using opposite Gamma Communications and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| Gamma Communications vs. T Mobile | Gamma Communications vs. ATT Inc | Gamma Communications vs. Deutsche Telekom AG | Gamma Communications vs. Deutsche Telekom AG |
| United Internet vs. T Mobile | United Internet vs. ATT Inc | United Internet vs. Deutsche Telekom AG | United Internet vs. Deutsche Telekom AG |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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