Correlation Between China Mobile and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both China Mobile 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 China Mobile and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Mobile Limited and Gamma Communications plc, you can compare the effects of market volatilities on China Mobile 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 China Mobile with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and Gamma Communications.
Diversification Opportunities for China Mobile and Gamma Communications
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Gamma is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile Limited 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 China Mobile 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 China Mobile Limited 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 China Mobile i.e., China Mobile and Gamma Communications go up and down completely randomly.
Pair Corralation between China Mobile and Gamma Communications
If you would invest 1,900 in Gamma Communications plc on September 4, 2024 and sell it today you would earn a total of 50.00 from holding Gamma Communications plc or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
China Mobile Limited vs. Gamma Communications plc
Performance |
| Timeline |
| China Mobile Limited |
| Gamma Communications plc |
China Mobile and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mobile and Gamma Communications
The main advantage of trading using opposite China Mobile and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile 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.The idea behind China Mobile Limited and Gamma Communications plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gamma Communications vs. T Mobile | Gamma Communications vs. China Mobile Limited | Gamma Communications vs. ATT Inc | Gamma Communications vs. Nippon Telegraph and |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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