Correlation Between Gamma Communications and Anglo American
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Anglo American 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 Anglo American 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 Anglo American PLC, you can compare the effects of market volatilities on Gamma Communications and Anglo American 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 Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Anglo American.
Diversification Opportunities for Gamma Communications and Anglo American
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gamma and Anglo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Anglo American PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American PLC 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 Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American PLC has no effect on the direction of Gamma Communications i.e., Gamma Communications and Anglo American go up and down completely randomly.
Pair Corralation between Gamma Communications and Anglo American
Assuming the 90 days trading horizon Gamma Communications is expected to generate 64.42 times less return on investment than Anglo American. But when comparing it to its historical volatility, Gamma Communications PLC is 1.8 times less risky than Anglo American. It trades about 0.01 of its potential returns per unit of risk. Anglo American PLC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 232,650 in Anglo American PLC on September 12, 2024 and sell it today you would earn a total of 17,850 from holding Anglo American PLC or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications PLC vs. Anglo American PLC
Performance |
| Timeline |
| Gamma Communications PLC |
| Anglo American PLC |
Gamma Communications and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Anglo American
The main advantage of trading using opposite Gamma Communications and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| Gamma Communications vs. Catalyst Media Group | Gamma Communications vs. CATLIN GROUP | Gamma Communications vs. Tamburi Investment Partners | Gamma Communications vs. Magnora ASA |
| Anglo American vs. Playtech Plc | Anglo American vs. TechnipFMC PLC | Anglo American vs. Verizon Communications | Anglo American vs. Roper Technologies |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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