Correlation Between Atrium Ljungberg and Gamma Communications

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

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

Diversification Opportunities for Atrium Ljungberg and Gamma Communications

0.27

Correlation Coefficient

Atrium Ljungberg  Gamma Communications

Modest diversification

The 3 months correlation between Atrium and Gamma is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Atrium Ljungberg AB 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 Atrium Ljungberg 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 Atrium Ljungberg AB 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 Atrium Ljungberg i.e., Atrium Ljungberg and Gamma Communications go up and down completely randomly.

Pair Corralation between Atrium Ljungberg and Gamma Communications

Assuming the 90 days horizon Atrium Ljungberg AB is expected to generate 1.17 times more return on investment than Gamma Communications. However, Atrium Ljungberg is 1.17 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 -0.28 per unit of risk. If you would invest  1,704  in Atrium Ljungberg AB on October 6, 2024 and sell it today you would earn a total of  22.00  from holding Atrium Ljungberg AB or generate 1.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Atrium Ljungberg AB  vs.  Gamma Communications plc

Atrium Ljungberg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Ljungberg AB 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gamma Communications plc

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Atrium Ljungberg and Gamma Communications

The main advantage of trading using opposite Atrium Ljungberg and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atrium Ljungberg 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 Atrium Ljungberg AB 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.