Correlation Between Transportadora and The9
Can any of the company-specific risk be diversified away by investing in both Transportadora and The9 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 The9 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 The9 Ltd ADR, you can compare the effects of market volatilities on Transportadora and The9 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 The9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and The9.
Diversification Opportunities for Transportadora and The9
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transportadora and The9 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and The9 Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The9 Ltd ADR 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 The9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The9 Ltd ADR has no effect on the direction of Transportadora i.e., Transportadora and The9 go up and down completely randomly.
Pair Corralation between Transportadora and The9
Considering the 90-day investment horizon Transportadora de Gas is expected to generate 0.6 times more return on investment than The9. However, Transportadora de Gas is 1.67 times less risky than The9. It trades about 0.11 of its potential returns per unit of risk. The9 Ltd ADR is currently generating about 0.06 per unit of risk. If you would invest 1,509 in Transportadora de Gas on August 25, 2024 and sell it today you would earn a total of 1,469 from holding Transportadora de Gas or generate 97.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. The9 Ltd ADR
Performance |
| Timeline |
| Transportadora de Gas |
| The9 Ltd ADR |
Transportadora and The9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and The9
The main advantage of trading using opposite Transportadora and The9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, The9 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 The9 will offset losses from the drop in The9's long position.| Transportadora vs. Petroleo Brasileiro Petrobras | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Petrleo Brasileiro SA | Transportadora vs. Equinor ASA ADR |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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