Correlation Between Transportadora and CSL
Can any of the company-specific risk be diversified away by investing in both Transportadora and CSL 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 CSL 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 CSL Limited, you can compare the effects of market volatilities on Transportadora and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and CSL.
Diversification Opportunities for Transportadora and CSL
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Transportadora and CSL is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of Transportadora i.e., Transportadora and CSL go up and down completely randomly.
Pair Corralation between Transportadora and CSL
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 3.63 times more return on investment than CSL. However, Transportadora is 3.63 times more volatile than CSL Limited. It trades about 0.25 of its potential returns per unit of risk. CSL Limited is currently generating about -0.09 per unit of risk. If you would invest 2,040 in Transportadora de Gas on September 12, 2024 and sell it today you would earn a total of 600.00 from holding Transportadora de Gas or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. CSL Limited
Performance |
| Timeline |
| Transportadora de Gas |
| CSL Limited |
Transportadora and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and CSL
The main advantage of trading using opposite Transportadora and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc |
| CSL vs. ARDAGH METAL PACDL 0001 | CSL vs. FUYO GENERAL LEASE | CSL vs. LION ONE METALS | CSL vs. Lion One Metals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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