Correlation Between Deutsche Telekom and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom 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 Deutsche Telekom and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and Gamma Communications plc, you can compare the effects of market volatilities on Deutsche Telekom 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 Deutsche Telekom with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and Gamma Communications.
Diversification Opportunities for Deutsche Telekom and Gamma Communications
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Deutsche and Gamma is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG 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 Deutsche Telekom 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 Deutsche Telekom AG 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 Deutsche Telekom i.e., Deutsche Telekom and Gamma Communications go up and down completely randomly.
Pair Corralation between Deutsche Telekom and Gamma Communications
Assuming the 90 days trading horizon Deutsche Telekom AG is expected to generate 0.82 times more return on investment than Gamma Communications. However, Deutsche Telekom AG is 1.22 times less risky than Gamma Communications. It trades about 0.09 of its potential returns per unit of risk. Gamma Communications plc is currently generating about 0.05 per unit of risk. If you would invest 2,136 in Deutsche Telekom AG on October 17, 2024 and sell it today you would earn a total of 764.00 from holding Deutsche Telekom AG or generate 35.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Telekom AG vs. Gamma Communications plc
Performance |
| Timeline |
| Deutsche Telekom |
| Gamma Communications plc |
Deutsche Telekom and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and Gamma Communications
The main advantage of trading using opposite Deutsche Telekom and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom 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.| Deutsche Telekom vs. MELIA HOTELS | Deutsche Telekom vs. InterContinental Hotels Group | Deutsche Telekom vs. Monster Beverage Corp | Deutsche Telekom vs. INTERCONT HOTELS |
| Gamma Communications vs. Bio Techne Corp | Gamma Communications vs. Motorcar Parts of | Gamma Communications vs. Commercial Vehicle Group | Gamma Communications vs. EMBARK EDUCATION LTD |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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