Correlation Between Gamma Communications and HNI

Can any of the company-specific risk be diversified away by investing in both Gamma Communications and HNI 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 HNI 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 HNI Corporation, you can compare the effects of market volatilities on Gamma Communications and HNI 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 HNI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and HNI.

Diversification Opportunities for Gamma Communications and HNI

0.45

Correlation Coefficient

Gamma Communications  HNI

Very weak diversification

The 3 months correlation between Gamma and HNI is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and HNI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corporation 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 HNI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corporation has no effect on the direction of Gamma Communications i.e., Gamma Communications and HNI go up and down completely randomly.

Pair Corralation between Gamma Communications and HNI

Assuming the 90 days horizon Gamma Communications is expected to generate 1.75 times less return on investment than HNI. In addition to that, Gamma Communications is 1.22 times more volatile than HNI Corporation. It trades about 0.03 of its total potential returns per unit of risk. HNI Corporation is currently generating about 0.07 per unit of volatility. If you would invest  2,449  in HNI Corporation on December 2, 2024 and sell it today you would earn a total of  1,991  from holding HNI Corporation or generate 81.3% return on investment over 90 days.

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

Gamma Communications plc  vs.  HNI Corp.

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.

HNI Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days HNI Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Gamma Communications and HNI

The main advantage of trading using opposite Gamma Communications and HNI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, HNI 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 HNI will offset losses from the drop in HNI's long position.

The idea behind Gamma Communications plc and HNI Corporation 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.