Correlation Between Gaztransport and Europa Metals
Can any of the company-specific risk be diversified away by investing in both Gaztransport and Europa Metals 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 Europa Metals 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 Europa Metals, you can compare the effects of market volatilities on Gaztransport and Europa Metals 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 Europa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and Europa Metals.
Diversification Opportunities for Gaztransport and Europa Metals
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gaztransport and Europa is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and Europa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europa Metals 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 Europa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europa Metals has no effect on the direction of Gaztransport i.e., Gaztransport and Europa Metals go up and down completely randomly.
Pair Corralation between Gaztransport and Europa Metals
Assuming the 90 days trading horizon Gaztransport is expected to generate 8.24 times less return on investment than Europa Metals. But when comparing it to its historical volatility, Gaztransport et Technigaz is 2.88 times less risky than Europa Metals. It trades about 0.04 of its potential returns per unit of risk. Europa Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 115.00 in Europa Metals on August 30, 2024 and sell it today you would earn a total of 85.00 from holding Europa Metals or generate 73.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaztransport et Technigaz vs. Europa Metals
Performance |
| Timeline |
| Gaztransport et Technigaz |
| Europa Metals |
Gaztransport and Europa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaztransport and Europa Metals
The main advantage of trading using opposite Gaztransport and Europa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport position performs unexpectedly, Europa Metals 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 Europa Metals will offset losses from the drop in Europa Metals' long position.| Gaztransport vs. Tungsten West PLC | Gaztransport vs. Argo Group Limited | Gaztransport vs. Hardide PLC | Gaztransport vs. Versarien PLC |
| Europa Metals vs. Givaudan SA | Europa Metals vs. Antofagasta PLC | Europa Metals vs. Centamin PLC | Europa Metals vs. Atalaya Mining |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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