Correlation Between Gamatronic Electronic and B Communications
Can any of the company-specific risk be diversified away by investing in both Gamatronic Electronic and B 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 Gamatronic Electronic and B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamatronic Electronic Industries and B Communications, you can compare the effects of market volatilities on Gamatronic Electronic and B 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 Gamatronic Electronic with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamatronic Electronic and B Communications.
Diversification Opportunities for Gamatronic Electronic and B Communications
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gamatronic and BCOM is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gamatronic Electronic Industri and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Gamatronic Electronic 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 Gamatronic Electronic Industries are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Gamatronic Electronic i.e., Gamatronic Electronic and B Communications go up and down completely randomly.
Pair Corralation between Gamatronic Electronic and B Communications
Assuming the 90 days trading horizon Gamatronic Electronic is expected to generate 10.99 times less return on investment than B Communications. But when comparing it to its historical volatility, Gamatronic Electronic Industries is 2.01 times less risky than B Communications. It trades about 0.06 of its potential returns per unit of risk. B Communications is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 134,400 in B Communications on September 1, 2024 and sell it today you would earn a total of 32,600 from holding B Communications or generate 24.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamatronic Electronic Industri vs. B Communications
Performance |
| Timeline |
| Gamatronic Electronic |
| B Communications |
Gamatronic Electronic and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamatronic Electronic and B Communications
The main advantage of trading using opposite Gamatronic Electronic and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamatronic Electronic position performs unexpectedly, B 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 B Communications will offset losses from the drop in B Communications' long position.The idea behind Gamatronic Electronic Industries and B Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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