Correlation Between Longvie SA and Transportadora
Can any of the company-specific risk be diversified away by investing in both Longvie SA and Transportadora 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 Longvie SA and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longvie SA and Transportadora de Gas, you can compare the effects of market volatilities on Longvie SA and Transportadora 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 Longvie SA with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longvie SA and Transportadora.
Diversification Opportunities for Longvie SA and Transportadora
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Longvie and Transportadora is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Longvie SA and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and Longvie SA 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 Longvie SA are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Longvie SA i.e., Longvie SA and Transportadora go up and down completely randomly.
Pair Corralation between Longvie SA and Transportadora
Assuming the 90 days trading horizon Longvie SA is expected to generate 1.27 times less return on investment than Transportadora. In addition to that, Longvie SA is 1.33 times more volatile than Transportadora de Gas. It trades about 0.26 of its total potential returns per unit of risk. Transportadora de Gas is currently generating about 0.44 per unit of volatility. If you would invest 530,000 in Transportadora de Gas on September 2, 2024 and sell it today you would earn a total of 130,000 from holding Transportadora de Gas or generate 24.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longvie SA vs. Transportadora de Gas
Performance |
| Timeline |
| Longvie SA |
| Transportadora de Gas |
Longvie SA and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longvie SA and Transportadora
The main advantage of trading using opposite Longvie SA and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longvie SA position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.The idea behind Longvie SA and Transportadora de Gas 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.| Transportadora vs. Harmony Gold Mining | Transportadora vs. Telecom Argentina | Transportadora vs. Agrometal SAI | Transportadora vs. United States Steel |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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