Correlation Between TOTAL ENERGY and Gamma Communications

Can any of the company-specific risk be diversified away by investing in both TOTAL 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 TOTAL 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 TOTAL ENERGY SERVS and Gamma Communications plc, you can compare the effects of market volatilities on TOTAL 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 TOTAL ENERGY with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL ENERGY and Gamma Communications.

Diversification Opportunities for TOTAL ENERGY and Gamma Communications

0.56

Correlation Coefficient

TOTAL ENERGY  Gamma Communications

Very weak diversification

The 3 months correlation between TOTAL and Gamma is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL ENERGY SERVS 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 TOTAL 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 TOTAL ENERGY SERVS 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 TOTAL ENERGY i.e., TOTAL ENERGY and Gamma Communications go up and down completely randomly.

Pair Corralation between TOTAL ENERGY and Gamma Communications

Assuming the 90 days horizon TOTAL ENERGY SERVS is expected to generate 1.5 times more return on investment than Gamma Communications. However, TOTAL ENERGY is 1.5 times more volatile than Gamma Communications plc. It trades about -0.07 of its potential returns per unit of risk. Gamma Communications plc is currently generating about -0.18 per unit of risk. If you would invest  721.00  in TOTAL ENERGY SERVS on December 28, 2024 and sell it today you would lose (104.00) from holding TOTAL ENERGY SERVS or give up 14.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TOTAL ENERGY SERVS  vs.  Gamma Communications plc

TOTAL ENERGY SERVS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOTAL ENERGY SERVS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TOTAL ENERGY and Gamma Communications

The main advantage of trading using opposite TOTAL ENERGY and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL 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 TOTAL ENERGY SERVS 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 Transaction History module to view history of all your transactions and understand their impact on performance.