Correlation Between Gamma Communications and Associated British
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Gamma Communications and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Associated British.
Diversification Opportunities for Gamma Communications and Associated British
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gamma and Associated is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Gamma Communications i.e., Gamma Communications and Associated British go up and down completely randomly.
Pair Corralation between Gamma Communications and Associated British
Assuming the 90 days trading horizon Gamma Communications PLC is expected to generate 1.23 times more return on investment than Associated British. However, Gamma Communications is 1.23 times more volatile than Associated British Foods. It trades about 0.05 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.09 per unit of risk. If you would invest 146,241 in Gamma Communications PLC on September 2, 2024 and sell it today you would earn a total of 11,759 from holding Gamma Communications PLC or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications PLC vs. Associated British Foods
Performance |
| Timeline |
| Gamma Communications PLC |
| Associated British Foods |
Gamma Communications and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Associated British
The main advantage of trading using opposite Gamma Communications and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Gamma Communications vs. Samsung Electronics Co | Gamma Communications vs. Samsung Electronics Co | Gamma Communications vs. Hyundai Motor | Gamma Communications vs. Toyota Motor Corp |
| Associated British vs. Vitec Software Group | Associated British vs. Kinnevik Investment AB | Associated British vs. Kaufman Et Broad | Associated British vs. Tatton Asset Management |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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