Correlation Between Naturgy Energy and GAIL (India)
Can any of the company-specific risk be diversified away by investing in both Naturgy Energy and GAIL (India) 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 Naturgy Energy and GAIL (India) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naturgy Energy Group and GAIL Limited, you can compare the effects of market volatilities on Naturgy Energy and GAIL (India) 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 Naturgy Energy with a short position of GAIL (India). Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturgy Energy and GAIL (India).
Diversification Opportunities for Naturgy Energy and GAIL (India)
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Naturgy and GAIL is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Naturgy Energy Group and GAIL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAIL Limited and Naturgy Energy 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 Naturgy Energy Group are associated (or correlated) with GAIL (India). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAIL Limited has no effect on the direction of Naturgy Energy i.e., Naturgy Energy and GAIL (India) go up and down completely randomly.
Pair Corralation between Naturgy Energy and GAIL (India)
Assuming the 90 days horizon Naturgy Energy Group is expected to under-perform the GAIL (India). But the pink sheet apears to be less risky and, when comparing its historical volatility, Naturgy Energy Group is 1.33 times less risky than GAIL (India). The pink sheet trades about -0.11 of its potential returns per unit of risk. The GAIL Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,528 in GAIL Limited on September 2, 2024 and sell it today you would earn a total of 129.00 from holding GAIL Limited or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naturgy Energy Group vs. GAIL Limited
Performance |
| Timeline |
| Naturgy Energy Group |
| GAIL Limited |
Naturgy Energy and GAIL (India) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturgy Energy and GAIL (India)
The main advantage of trading using opposite Naturgy Energy and GAIL (India) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturgy Energy position performs unexpectedly, GAIL (India) 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 GAIL (India) will offset losses from the drop in GAIL (India)'s long position.| Naturgy Energy vs. Atmos Energy | Naturgy Energy vs. LCI Industries | Naturgy Energy vs. Golden Agri Resources | Naturgy Energy vs. Empire State Realty |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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