Correlation Between Gaztransport Technigaz and Neoen SA
Can any of the company-specific risk be diversified away by investing in both Gaztransport Technigaz and Neoen SA 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 Technigaz and Neoen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaztransport Technigaz SAS and Neoen SA, you can compare the effects of market volatilities on Gaztransport Technigaz and Neoen SA 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 Technigaz with a short position of Neoen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport Technigaz and Neoen SA.
Diversification Opportunities for Gaztransport Technigaz and Neoen SA
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gaztransport and Neoen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SAS and Neoen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neoen SA and Gaztransport Technigaz 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 Technigaz SAS are associated (or correlated) with Neoen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neoen SA has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Neoen SA go up and down completely randomly.
Pair Corralation between Gaztransport Technigaz and Neoen SA
Assuming the 90 days trading horizon Gaztransport Technigaz SAS is expected to generate 0.88 times more return on investment than Neoen SA. However, Gaztransport Technigaz SAS is 1.14 times less risky than Neoen SA. It trades about 0.05 of its potential returns per unit of risk. Neoen SA is currently generating about 0.02 per unit of risk. If you would invest 9,897 in Gaztransport Technigaz SAS on August 25, 2024 and sell it today you would earn a total of 4,213 from holding Gaztransport Technigaz SAS or generate 42.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaztransport Technigaz SAS vs. Neoen SA
Performance |
| Timeline |
| Gaztransport Technigaz |
| Neoen SA |
Gaztransport Technigaz and Neoen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaztransport Technigaz and Neoen SA
The main advantage of trading using opposite Gaztransport Technigaz and Neoen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport Technigaz position performs unexpectedly, Neoen SA 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 Neoen SA will offset losses from the drop in Neoen SA's long position.| Gaztransport Technigaz vs. Rubis SCA | Gaztransport Technigaz vs. Teleperformance SE | Gaztransport Technigaz vs. Sartorius Stedim Biotech | Gaztransport Technigaz vs. Nexity |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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