Correlation Between Gamma Communications and Triad Group

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

Diversification Opportunities for Gamma Communications and Triad Group

0.06

Correlation Coefficient

Gamma Communications  Triad Group

Significant diversification

The 3 months correlation between Gamma and Triad is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Triad Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triad Group PLC 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 Triad Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triad Group PLC has no effect on the direction of Gamma Communications i.e., Gamma Communications and Triad Group go up and down completely randomly.

Pair Corralation between Gamma Communications and Triad Group

Assuming the 90 days trading horizon Gamma Communications is expected to generate 2.37 times less return on investment than Triad Group. But when comparing it to its historical volatility, Gamma Communications PLC is 1.67 times less risky than Triad Group. It trades about 0.08 of its potential returns per unit of risk. Triad Group PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12,080  in Triad Group PLC on October 6, 2024 and sell it today you would earn a total of  15,420  from holding Triad Group PLC or generate 127.65% return on investment over 90 days.

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

Gamma Communications PLC  vs.  Triad Group PLC

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. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Triad Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triad Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gamma Communications and Triad Group

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

The idea behind Gamma Communications PLC and Triad Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.