Correlation Between TELE2 B and Transportadora
Can any of the company-specific risk be diversified away by investing in both TELE2 B 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 TELE2 B and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TELE2 B and Transportadora de Gas, you can compare the effects of market volatilities on TELE2 B 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 TELE2 B with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELE2 B and Transportadora.
Diversification Opportunities for TELE2 B and Transportadora
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TELE2 and Transportadora is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TELE2 B 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 TELE2 B 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 TELE2 B 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 TELE2 B i.e., TELE2 B and Transportadora go up and down completely randomly.
Pair Corralation between TELE2 B and Transportadora
Assuming the 90 days trading horizon TELE2 B is expected to generate 1.47 times more return on investment than Transportadora. However, TELE2 B is 1.47 times more volatile than Transportadora de Gas. It trades about 0.11 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.08 per unit of risk. If you would invest 149.00 in TELE2 B on September 12, 2024 and sell it today you would earn a total of 843.00 from holding TELE2 B or generate 565.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TELE2 B vs. Transportadora de Gas
Performance |
| Timeline |
| TELE2 B |
| Transportadora de Gas |
TELE2 B and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TELE2 B and Transportadora
The main advantage of trading using opposite TELE2 B and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TELE2 B 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 TELE2 B 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. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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