Correlation Between Transportadora and Banco Patagonia
Can any of the company-specific risk be diversified away by investing in both Transportadora and Banco Patagonia 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 Banco Patagonia 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 Banco Patagonia, you can compare the effects of market volatilities on Transportadora and Banco Patagonia 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 Banco Patagonia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Banco Patagonia.
Diversification Opportunities for Transportadora and Banco Patagonia
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transportadora and Banco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Banco Patagonia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Patagonia 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 Banco Patagonia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Patagonia has no effect on the direction of Transportadora i.e., Transportadora and Banco Patagonia go up and down completely randomly.
Pair Corralation between Transportadora and Banco Patagonia
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 0.86 times more return on investment than Banco Patagonia. However, Transportadora de Gas is 1.16 times less risky than Banco Patagonia. It trades about 0.11 of its potential returns per unit of risk. Banco Patagonia is currently generating about 0.02 per unit of risk. If you would invest 445,170 in Transportadora de Gas on September 13, 2024 and sell it today you would earn a total of 205,830 from holding Transportadora de Gas or generate 46.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Transportadora de Gas vs. Banco Patagonia
Performance |
| Timeline |
| Transportadora de Gas |
| Banco Patagonia |
Transportadora and Banco Patagonia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Banco Patagonia
The main advantage of trading using opposite Transportadora and Banco Patagonia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Banco Patagonia 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 Banco Patagonia will offset losses from the drop in Banco Patagonia's long position.| Transportadora vs. Telecom Argentina | Transportadora vs. Compania de Transporte | Transportadora vs. Harmony Gold Mining | Transportadora vs. Agrometal SAI |
| Banco Patagonia vs. Transportadora de Gas | Banco Patagonia vs. Compania de Transporte | Banco Patagonia vs. Harmony Gold Mining | Banco Patagonia vs. Agrometal SAI |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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