Correlation Between NOS SGPS and Galp Energia
Can any of the company-specific risk be diversified away by investing in both NOS SGPS and Galp Energia 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 NOS SGPS and Galp Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOS SGPS SA and Galp Energia SGPS, you can compare the effects of market volatilities on NOS SGPS and Galp Energia 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 NOS SGPS with a short position of Galp Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOS SGPS and Galp Energia.
Diversification Opportunities for NOS SGPS and Galp Energia
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NOS and Galp is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NOS SGPS SA and Galp Energia SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galp Energia SGPS and NOS SGPS 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 NOS SGPS SA are associated (or correlated) with Galp Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galp Energia SGPS has no effect on the direction of NOS SGPS i.e., NOS SGPS and Galp Energia go up and down completely randomly.
Pair Corralation between NOS SGPS and Galp Energia
Assuming the 90 days trading horizon NOS SGPS SA is expected to under-perform the Galp Energia. In addition to that, NOS SGPS is 1.13 times more volatile than Galp Energia SGPS. It trades about -0.1 of its total potential returns per unit of risk. Galp Energia SGPS is currently generating about -0.09 per unit of volatility. If you would invest 1,623 in Galp Energia SGPS on August 29, 2024 and sell it today you would lose (45.00) from holding Galp Energia SGPS or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOS SGPS SA vs. Galp Energia SGPS
Performance |
| Timeline |
| NOS SGPS SA |
| Galp Energia SGPS |
NOS SGPS and Galp Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOS SGPS and Galp Energia
The main advantage of trading using opposite NOS SGPS and Galp Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOS SGPS position performs unexpectedly, Galp Energia 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 Galp Energia will offset losses from the drop in Galp Energia's long position.| NOS SGPS vs. Futebol Clube do | NOS SGPS vs. Sporting Clube de | NOS SGPS vs. Martifer SGPS SA | NOS SGPS vs. Corticeira Amorim |
| Galp Energia vs. EDP Energias | Galp Energia vs. Sonae SGPS SA | Galp Energia vs. Banco Comercial Portugues | Galp Energia vs. NOS SGPS SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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