Correlation Between Gaztransport and DG Innovate
Can any of the company-specific risk be diversified away by investing in both Gaztransport and DG Innovate 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 Gaztransport and DG Innovate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaztransport et Technigaz and DG Innovate PLC, you can compare the effects of market volatilities on Gaztransport and DG Innovate 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 Gaztransport with a short position of DG Innovate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and DG Innovate.
Diversification Opportunities for Gaztransport and DG Innovate
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gaztransport and DGI is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and DG Innovate PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DG Innovate PLC and Gaztransport 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 Gaztransport et Technigaz are associated (or correlated) with DG Innovate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DG Innovate PLC has no effect on the direction of Gaztransport i.e., Gaztransport and DG Innovate go up and down completely randomly.
Pair Corralation between Gaztransport and DG Innovate
Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to under-perform the DG Innovate. But the stock apears to be less risky and, when comparing its historical volatility, Gaztransport et Technigaz is 7.37 times less risky than DG Innovate. The stock trades about -0.04 of its potential returns per unit of risk. The DG Innovate PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7.50 in DG Innovate PLC on September 13, 2024 and sell it today you would earn a total of 1.00 from holding DG Innovate PLC or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gaztransport et Technigaz vs. DG Innovate PLC
Performance |
| Timeline |
| Gaztransport et Technigaz |
| DG Innovate PLC |
Gaztransport and DG Innovate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaztransport and DG Innovate
The main advantage of trading using opposite Gaztransport and DG Innovate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport position performs unexpectedly, DG Innovate 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 DG Innovate will offset losses from the drop in DG Innovate's long position.| Gaztransport vs. Samsung Electronics Co | Gaztransport vs. Samsung Electronics Co | Gaztransport vs. Hyundai Motor | Gaztransport vs. Reliance Industries Ltd |
| DG Innovate vs. Alliance Data Systems | DG Innovate vs. Future Metals NL | DG Innovate vs. Fulcrum Metals PLC | DG Innovate vs. European Metals Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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