Correlation Between Transportadora and AMP
Can any of the company-specific risk be diversified away by investing in both Transportadora and AMP 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 Transportadora and AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and AMP, you can compare the effects of market volatilities on Transportadora and AMP 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 Transportadora with a short position of AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and AMP.
Diversification Opportunities for Transportadora and AMP
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transportadora and AMP is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP and Transportadora 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 Transportadora de Gas are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Transportadora i.e., Transportadora and AMP go up and down completely randomly.
Pair Corralation between Transportadora and AMP
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.7 times more return on investment than AMP. However, Transportadora is 1.7 times more volatile than AMP. It trades about 0.06 of its potential returns per unit of risk. AMP is currently generating about 0.03 per unit of risk. If you would invest 1,020 in Transportadora de Gas on September 14, 2024 and sell it today you would earn a total of 1,540 from holding Transportadora de Gas or generate 150.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Transportadora de Gas vs. AMP
Performance |
| Timeline |
| Transportadora de Gas |
| AMP |
Transportadora and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and AMP
The main advantage of trading using opposite Transportadora and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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