Correlation Between Gamma Communications and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Rio Tinto 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 Rio Tinto 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 Rio Tinto ADR, you can compare the effects of market volatilities on Gamma Communications and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Rio Tinto.
Diversification Opportunities for Gamma Communications and Rio Tinto
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gamma and Rio is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Rio Tinto ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto ADR 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto ADR has no effect on the direction of Gamma Communications i.e., Gamma Communications and Rio Tinto go up and down completely randomly.
Pair Corralation between Gamma Communications and Rio Tinto
Assuming the 90 days horizon Gamma Communications is expected to generate 26.76 times less return on investment than Rio Tinto. But when comparing it to its historical volatility, Gamma Communications plc is 14.05 times less risky than Rio Tinto. It trades about 0.13 of its potential returns per unit of risk. Rio Tinto ADR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 6,244 in Rio Tinto ADR on September 12, 2025 and sell it today you would earn a total of 1,380 from holding Rio Tinto ADR or generate 22.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. Rio Tinto ADR
Performance |
| Timeline |
| Gamma Communications plc |
| Rio Tinto ADR |
Gamma Communications and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Rio Tinto
The main advantage of trading using opposite Gamma Communications and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Gamma Communications vs. Cyfrowy Polsat SA | Gamma Communications vs. LINK Mobility Group | Gamma Communications vs. Cengage Learning Holdings | Gamma Communications vs. Future plc |
| Rio Tinto vs. Southern Copper | Rio Tinto vs. BHP Group Limited | Rio Tinto vs. Vale SA ADR | Rio Tinto vs. Newmont Goldcorp Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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