Correlation Between Caledonia Mining and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Gamma Communications 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 Caledonia Mining and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Gamma Communications PLC, you can compare the effects of market volatilities on Caledonia Mining and Gamma Communications 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 Caledonia Mining with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Gamma Communications.
Diversification Opportunities for Caledonia Mining and Gamma Communications
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caledonia and Gamma is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Gamma Communications go up and down completely randomly.
Pair Corralation between Caledonia Mining and Gamma Communications
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 0.89 times more return on investment than Gamma Communications. However, Caledonia Mining is 1.12 times less risky than Gamma Communications. It trades about 0.06 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.61 per unit of risk. If you would invest 77,500 in Caledonia Mining on October 22, 2024 and sell it today you would earn a total of 1,000.00 from holding Caledonia Mining or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Gamma Communications PLC
Performance |
| Timeline |
| Caledonia Mining |
| Gamma Communications PLC |
Caledonia Mining and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Gamma Communications
The main advantage of trading using opposite Caledonia Mining and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Ferrexpo PLC | Caledonia Mining vs. Atalaya Mining |
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 Stocks Directory module to find actively traded stocks across global markets.
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