Correlation Between CVR Energy and Gamma Communications

Can any of the company-specific risk be diversified away by investing in both CVR Energy 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 CVR Energy and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVR Energy and Gamma Communications PLC, you can compare the effects of market volatilities on CVR Energy 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 CVR Energy with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Gamma Communications.

Diversification Opportunities for CVR Energy and Gamma Communications

-0.54

Correlation Coefficient

CVR Energy  Gamma Communications

Excellent diversification

The 3 months correlation between CVR and Gamma is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy 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 CVR Energy 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 CVR Energy 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 CVR Energy i.e., CVR Energy and Gamma Communications go up and down completely randomly.

Pair Corralation between CVR Energy and Gamma Communications

Assuming the 90 days trading horizon CVR Energy is expected to generate 1.91 times more return on investment than Gamma Communications. However, CVR Energy is 1.91 times more volatile than Gamma Communications PLC. It trades about 0.06 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.2 per unit of risk. If you would invest  1,875  in CVR Energy on December 30, 2024 and sell it today you would earn a total of  156.00  from holding CVR Energy or generate 8.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

CVR Energy  vs.  Gamma Communications PLC

CVR Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVR Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gamma Communications PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gamma Communications PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CVR Energy and Gamma Communications

The main advantage of trading using opposite CVR Energy and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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 CVR Energy 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.