Correlation Between National Beverage and Gaztransport Technigaz

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Can any of the company-specific risk be diversified away by investing in both National Beverage and Gaztransport Technigaz 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 National Beverage and Gaztransport Technigaz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Gaztransport Technigaz SA, you can compare the effects of market volatilities on National Beverage and Gaztransport Technigaz 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 National Beverage with a short position of Gaztransport Technigaz. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Gaztransport Technigaz.

Diversification Opportunities for National Beverage and Gaztransport Technigaz

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between National and Gaztransport is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and National Beverage 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 National Beverage Corp are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of National Beverage i.e., National Beverage and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between National Beverage and Gaztransport Technigaz

Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Gaztransport Technigaz. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.25 times less risky than Gaztransport Technigaz. The stock trades about -0.26 of its potential returns per unit of risk. The Gaztransport Technigaz SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  13,376  in Gaztransport Technigaz SA on October 30, 2024 and sell it today you would earn a total of  1,454  from holding Gaztransport Technigaz SA or generate 10.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

National Beverage Corp  vs.  Gaztransport Technigaz SA

 Performance 
       Timeline  
National Beverage Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Gaztransport Technigaz 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gaztransport Technigaz reported solid returns over the last few months and may actually be approaching a breakup point.

National Beverage and Gaztransport Technigaz Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National Beverage and Gaztransport Technigaz

The main advantage of trading using opposite National Beverage and Gaztransport Technigaz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Gaztransport Technigaz 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 Gaztransport Technigaz will offset losses from the drop in Gaztransport Technigaz's long position.
The idea behind National Beverage Corp and Gaztransport Technigaz SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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