Correlation Between Gamma Communications and Automatic Data

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

Diversification Opportunities for Gamma Communications and Automatic Data

-0.23

Correlation Coefficient

Gamma Communications  Automatic Data

Very good diversification

The 3 months correlation between Gamma and Automatic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Gamma Communications i.e., Gamma Communications and Automatic Data go up and down completely randomly.

Pair Corralation between Gamma Communications and Automatic Data

Assuming the 90 days trading horizon Gamma Communications PLC is expected to under-perform the Automatic Data. In addition to that, Gamma Communications is 1.99 times more volatile than Automatic Data Processing. It trades about -0.11 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.06 per unit of volatility. If you would invest  29,180  in Automatic Data Processing on April 24, 2025 and sell it today you would earn a total of  1,146  from holding Automatic Data Processing or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Gamma Communications PLC  vs.  Automatic Data Processing

Gamma Communications PLC

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Automatic Data Processing

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Automatic Data is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gamma Communications and Automatic Data

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

The idea behind Gamma Communications PLC and Automatic Data Processing 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.