Correlation Between Transportadora and NKSJ HOLDINGS
Can any of the company-specific risk be diversified away by investing in both Transportadora and NKSJ HOLDINGS 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 NKSJ HOLDINGS 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 NKSJ HOLDINGS, you can compare the effects of market volatilities on Transportadora and NKSJ HOLDINGS 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 NKSJ HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and NKSJ HOLDINGS.
Diversification Opportunities for Transportadora and NKSJ HOLDINGS
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transportadora and NKSJ is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and NKSJ HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKSJ HOLDINGS 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 NKSJ HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKSJ HOLDINGS has no effect on the direction of Transportadora i.e., Transportadora and NKSJ HOLDINGS go up and down completely randomly.
Pair Corralation between Transportadora and NKSJ HOLDINGS
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.43 times more return on investment than NKSJ HOLDINGS. However, Transportadora is 1.43 times more volatile than NKSJ HOLDINGS. It trades about 0.21 of its potential returns per unit of risk. NKSJ HOLDINGS is currently generating about 0.26 per unit of risk. If you would invest 2,160 in Transportadora de Gas on September 13, 2024 and sell it today you would earn a total of 500.00 from holding Transportadora de Gas or generate 23.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Transportadora de Gas vs. NKSJ HOLDINGS
Performance |
| Timeline |
| Transportadora de Gas |
| NKSJ HOLDINGS |
Transportadora and NKSJ HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and NKSJ HOLDINGS
The main advantage of trading using opposite Transportadora and NKSJ HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, NKSJ HOLDINGS 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 NKSJ HOLDINGS will offset losses from the drop in NKSJ HOLDINGS's long position.| Transportadora vs. Public Storage | Transportadora vs. GOLD ROAD RES | Transportadora vs. EVS Broadcast Equipment | Transportadora vs. Texas Roadhouse |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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