Correlation Between Transportadora and BII Railway
Can any of the company-specific risk be diversified away by investing in both Transportadora and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Transportadora and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and BII Railway.
Diversification Opportunities for Transportadora and BII Railway
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transportadora and BII is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Transportadora i.e., Transportadora and BII Railway go up and down completely randomly.
Pair Corralation between Transportadora and BII Railway
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 2.52 times more return on investment than BII Railway. However, Transportadora is 2.52 times more volatile than BII Railway Transportation. It trades about 0.34 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.1 per unit of risk. If you would invest 1,900 in Transportadora de Gas on August 25, 2024 and sell it today you would earn a total of 740.00 from holding Transportadora de Gas or generate 38.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. BII Railway Transportation
Performance |
| Timeline |
| Transportadora de Gas |
| BII Railway Transpor |
Transportadora and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and BII Railway
The main advantage of trading using opposite Transportadora and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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