Correlation Between Penta-Ocean Construction and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Penta-Ocean Construction 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 Penta-Ocean Construction and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penta Ocean Construction Co and Gamma Communications plc, you can compare the effects of market volatilities on Penta-Ocean Construction 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 Penta-Ocean Construction with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta-Ocean Construction and Gamma Communications.
Diversification Opportunities for Penta-Ocean Construction and Gamma Communications
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Penta-Ocean and Gamma is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co 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 Penta-Ocean Construction 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 Penta Ocean Construction Co 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 Penta-Ocean Construction i.e., Penta-Ocean Construction and Gamma Communications go up and down completely randomly.
Pair Corralation between Penta-Ocean Construction and Gamma Communications
Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 1.15 times more return on investment than Gamma Communications. However, Penta-Ocean Construction is 1.15 times more volatile than Gamma Communications plc. It trades about 0.1 of its potential returns per unit of risk. Gamma Communications plc is currently generating about -0.16 per unit of risk. If you would invest 380.00 in Penta Ocean Construction Co on December 1, 2024 and sell it today you would earn a total of 42.00 from holding Penta Ocean Construction Co or generate 11.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Penta Ocean Construction Co vs. Gamma Communications plc
Performance |
Timeline |
Penta-Ocean Construction |
Gamma Communications plc |
Penta-Ocean Construction and Gamma Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penta-Ocean Construction and Gamma Communications
The main advantage of trading using opposite Penta-Ocean Construction and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta-Ocean Construction 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 Penta Ocean Construction Co 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.
Gamma Communications vs. UET United Electronic | Gamma Communications vs. Samsung Electronics Co | Gamma Communications vs. AUST AGRICULTURAL | Gamma Communications vs. Nucletron Electronic Aktiengesellschaft |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
CEOs Directory Screen CEOs from public companies around the world | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |