Correlation Between HF SINCLAIR and Gamma Communications

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

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

Diversification Opportunities for HF SINCLAIR and Gamma Communications

0.28

Correlation Coefficient

HF SINCLAIR  Gamma Communications

Modest diversification

The 3 months correlation between HL80 and Gamma is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding HF SINCLAIR P 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 HF SINCLAIR 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 HF SINCLAIR P 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 HF SINCLAIR i.e., HF SINCLAIR and Gamma Communications go up and down completely randomly.

Pair Corralation between HF SINCLAIR and Gamma Communications

Assuming the 90 days trading horizon HF SINCLAIR P is expected to under-perform the Gamma Communications. In addition to that, HF SINCLAIR is 1.34 times more volatile than Gamma Communications plc. It trades about -0.06 of its total potential returns per unit of risk. Gamma Communications plc is currently generating about 0.0 per unit of volatility. If you would invest  1,973  in Gamma Communications plc on September 12, 2024 and sell it today you would lose (13.00) from holding Gamma Communications plc or give up 0.66% of portfolio value over 90 days.

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

HF SINCLAIR P  vs.  Gamma Communications plc

HF SINCLAIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF SINCLAIR P 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.

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 nearly stable basic indicators, Gamma Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HF SINCLAIR and Gamma Communications

The main advantage of trading using opposite HF SINCLAIR and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF SINCLAIR 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 HF SINCLAIR P 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 Stocks Directory module to find actively traded stocks across global markets.