Correlation Between Gamma Communications and Ashtead Technology
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Ashtead Technology 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 Ashtead Technology 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 Ashtead Technology Holdings, you can compare the effects of market volatilities on Gamma Communications and Ashtead Technology 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 Ashtead Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Ashtead Technology.
Diversification Opportunities for Gamma Communications and Ashtead Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gamma and Ashtead is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Ashtead Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Technology 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 Ashtead Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Technology has no effect on the direction of Gamma Communications i.e., Gamma Communications and Ashtead Technology go up and down completely randomly.
Pair Corralation between Gamma Communications and Ashtead Technology
Assuming the 90 days trading horizon Gamma Communications is expected to generate 5.47 times less return on investment than Ashtead Technology. But when comparing it to its historical volatility, Gamma Communications PLC is 1.76 times less risky than Ashtead Technology. It trades about 0.02 of its potential returns per unit of risk. Ashtead Technology Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 50,300 in Ashtead Technology Holdings on September 15, 2024 and sell it today you would earn a total of 1,200 from holding Ashtead Technology Holdings or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications PLC vs. Ashtead Technology Holdings
Performance |
| Timeline |
| Gamma Communications PLC |
| Ashtead Technology |
Gamma Communications and Ashtead Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Ashtead Technology
The main advantage of trading using opposite Gamma Communications and Ashtead Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Ashtead Technology 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 Ashtead Technology will offset losses from the drop in Ashtead Technology's long position.| Gamma Communications vs. SM Energy Co | Gamma Communications vs. FuelCell Energy | Gamma Communications vs. Grand Vision Media | Gamma Communications vs. DG Innovate PLC |
| Ashtead Technology vs. Gruppo MutuiOnline SpA | Ashtead Technology vs. Gamma Communications PLC | Ashtead Technology vs. Endeavour Mining Corp | Ashtead Technology vs. Axway Software SA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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