Correlation Between Prosafe SE and TGS NOPEC
Can any of the company-specific risk be diversified away by investing in both Prosafe SE and TGS NOPEC 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 Prosafe SE and TGS NOPEC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and TGS NOPEC Geophysical, you can compare the effects of market volatilities on Prosafe SE and TGS NOPEC 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 Prosafe SE with a short position of TGS NOPEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and TGS NOPEC.
Diversification Opportunities for Prosafe SE and TGS NOPEC
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prosafe and TGS is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and TGS NOPEC Geophysical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGS NOPEC Geophysical and Prosafe SE 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 Prosafe SE are associated (or correlated) with TGS NOPEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGS NOPEC Geophysical has no effect on the direction of Prosafe SE i.e., Prosafe SE and TGS NOPEC go up and down completely randomly.
Pair Corralation between Prosafe SE and TGS NOPEC
Assuming the 90 days trading horizon Prosafe SE is expected to under-perform the TGS NOPEC. In addition to that, Prosafe SE is 6.74 times more volatile than TGS NOPEC Geophysical. It trades about -0.3 of its total potential returns per unit of risk. TGS NOPEC Geophysical is currently generating about 0.28 per unit of volatility. If you would invest 10,100 in TGS NOPEC Geophysical on September 13, 2024 and sell it today you would earn a total of 1,040 from holding TGS NOPEC Geophysical or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosafe SE vs. TGS NOPEC Geophysical
Performance |
| Timeline |
| Prosafe SE |
| TGS NOPEC Geophysical |
Prosafe SE and TGS NOPEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and TGS NOPEC
The main advantage of trading using opposite Prosafe SE and TGS NOPEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE position performs unexpectedly, TGS NOPEC 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 TGS NOPEC will offset losses from the drop in TGS NOPEC's long position.The idea behind Prosafe SE and TGS NOPEC Geophysical 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.| TGS NOPEC vs. Solstad Offsho | TGS NOPEC vs. Prosafe SE | TGS NOPEC vs. BW Offshore | TGS NOPEC vs. Kongsberg Gruppen ASA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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