Correlation Between Gamma Communications and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on Gamma Communications and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Golden Metal.
Diversification Opportunities for Gamma Communications and Golden Metal
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gamma and Golden is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Gamma Communications i.e., Gamma Communications and Golden Metal go up and down completely randomly.
Pair Corralation between Gamma Communications and Golden Metal
Assuming the 90 days trading horizon Gamma Communications PLC is not expected to generate positive returns. However, Gamma Communications PLC is 4.82 times less risky than Golden Metal. It waists most of its returns potential to compensate for thr risk taken. Golden Metal is generating about 0.23 per unit of risk. If you would invest 2,600 in Golden Metal Resources on August 27, 2024 and sell it today you would earn a total of 700.00 from holding Golden Metal Resources or generate 26.92% 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. Golden Metal Resources
Performance |
| Timeline |
| Gamma Communications PLC |
| Golden Metal Resources |
Gamma Communications and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Golden Metal
The main advantage of trading using opposite Gamma Communications and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Gamma Communications vs. Vitec Software Group | Gamma Communications vs. Infrastrutture Wireless Italiane | Gamma Communications vs. PPHE Hotel Group | Gamma Communications vs. Scandic Hotels Group |
| Golden Metal vs. Regions Financial Corp | Golden Metal vs. Panther Metals PLC | Golden Metal vs. Adriatic Metals | Golden Metal vs. Ally Financial |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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