Correlation Between Transportadora and Kering SA

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Can any of the company-specific risk be diversified away by investing in both Transportadora and Kering SA 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 Kering SA 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 Kering SA, you can compare the effects of market volatilities on Transportadora and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Kering SA.

Diversification Opportunities for Transportadora and Kering SA

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Transportadora and Kering is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Transportadora i.e., Transportadora and Kering SA go up and down completely randomly.

Pair Corralation between Transportadora and Kering SA

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.8 times more return on investment than Kering SA. However, Transportadora is 1.8 times more volatile than Kering SA. It trades about 0.25 of its potential returns per unit of risk. Kering SA is currently generating about 0.16 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 Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Transportadora de Gas  vs.  Kering SA

 Performance 
       Timeline  
Transportadora de Gas 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Transportadora reported solid returns over the last few months and may actually be approaching a breakup point.
Kering SA 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Kering SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kering SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Transportadora and Kering SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Transportadora and Kering SA

The main advantage of trading using opposite Transportadora and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.
The idea behind Transportadora de Gas and Kering SA 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.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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