Correlation Between Gamma Communications and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS, you can compare the effects of market volatilities on Gamma Communications and APPLIED MATERIALS 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 APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and APPLIED MATERIALS.
Diversification Opportunities for Gamma Communications and APPLIED MATERIALS
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gamma and APPLIED is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS 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 APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of Gamma Communications i.e., Gamma Communications and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Gamma Communications and APPLIED MATERIALS
Assuming the 90 days horizon Gamma Communications plc is expected to under-perform the APPLIED MATERIALS. But the stock apears to be less risky and, when comparing its historical volatility, Gamma Communications plc is 1.49 times less risky than APPLIED MATERIALS. The stock trades about -0.18 of its potential returns per unit of risk. The APPLIED MATERIALS is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 17,149 in APPLIED MATERIALS on December 4, 2024 and sell it today you would lose (2,679) from holding APPLIED MATERIALS or give up 15.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gamma Communications plc vs. APPLIED MATERIALS
Performance |
Timeline |
Gamma Communications plc |
APPLIED MATERIALS |
Gamma Communications and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gamma Communications and APPLIED MATERIALS
The main advantage of trading using opposite Gamma Communications and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, APPLIED MATERIALS 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 APPLIED MATERIALS will offset losses from the drop in APPLIED MATERIALS's long position.The idea behind Gamma Communications plc and APPLIED MATERIALS 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.
APPLIED MATERIALS vs. AGNC Investment Corp | APPLIED MATERIALS vs. Japan Asia Investment | APPLIED MATERIALS vs. HK Electric Investments | APPLIED MATERIALS vs. Diversified Healthcare Trust |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |