Correlation Between ATT and TGS ASA
Can any of the company-specific risk be diversified away by investing in both ATT and TGS ASA 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 ATT and TGS ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and TGS ASA, you can compare the effects of market volatilities on ATT and TGS ASA 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 ATT with a short position of TGS ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and TGS ASA.
Diversification Opportunities for ATT and TGS ASA
Pay attention - limited upside
The 3 months correlation between ATT and TGS is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and TGS ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGS ASA and ATT 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 ATT Inc are associated (or correlated) with TGS ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGS ASA has no effect on the direction of ATT i.e., ATT and TGS ASA go up and down completely randomly.
Pair Corralation between ATT and TGS ASA
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.5 times more return on investment than TGS ASA. However, ATT Inc is 2.0 times less risky than TGS ASA. It trades about 0.05 of its potential returns per unit of risk. TGS ASA is currently generating about 0.0 per unit of risk. If you would invest 1,703 in ATT Inc on September 2, 2024 and sell it today you would earn a total of 613.00 from holding ATT Inc or generate 36.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 71.57% |
| Values | Daily Returns |
ATT Inc vs. TGS ASA
Performance |
| Timeline |
| ATT Inc |
| TGS ASA |
ATT and TGS ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and TGS ASA
The main advantage of trading using opposite ATT and TGS ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, TGS ASA 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 ASA will offset losses from the drop in TGS ASA's long position.The idea behind ATT Inc and TGS ASA 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 ASA vs. Expro Group Holdings | TGS ASA vs. ChampionX | TGS ASA vs. Ranger Energy Services | TGS ASA vs. Cactus 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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