Correlation Between Ming Le and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Ming Le and Gamma 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 Ming Le and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ming Le Sports and Gamma Communications plc, you can compare the effects of market volatilities on Ming Le and Gamma 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 Ming Le with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Gamma Communications.
Diversification Opportunities for Ming Le and Gamma Communications
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ming and Gamma is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc and Ming Le 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 Ming Le Sports are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of Ming Le i.e., Ming Le and Gamma Communications go up and down completely randomly.
Pair Corralation between Ming Le and Gamma Communications
Assuming the 90 days trading horizon Ming Le Sports is expected to generate 5.57 times more return on investment than Gamma Communications. However, Ming Le is 5.57 times more volatile than Gamma Communications plc. It trades about 0.13 of its potential returns per unit of risk. Gamma Communications plc is currently generating about 0.06 per unit of risk. If you would invest 100.00 in Ming Le Sports on September 13, 2024 and sell it today you would earn a total of 19.00 from holding Ming Le Sports or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Le Sports vs. Gamma Communications plc
Performance |
| Timeline |
| Ming Le Sports |
| Gamma Communications plc |
Ming Le and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and Gamma Communications
The main advantage of trading using opposite Ming Le and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, Gamma 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.The idea behind Ming Le Sports and Gamma Communications plc 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.| Gamma Communications vs. Lamar Advertising | Gamma Communications vs. CARSALESCOM | Gamma Communications vs. Ribbon Communications | Gamma Communications vs. Charter Communications |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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