Correlation Between Transportadora and Longvie SA
Can any of the company-specific risk be diversified away by investing in both Transportadora and Longvie 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 Longvie 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 Longvie SA, you can compare the effects of market volatilities on Transportadora and Longvie 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 Longvie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Longvie SA.
Diversification Opportunities for Transportadora and Longvie SA
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transportadora and Longvie is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Longvie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longvie 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 Longvie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longvie SA has no effect on the direction of Transportadora i.e., Transportadora and Longvie SA go up and down completely randomly.
Pair Corralation between Transportadora and Longvie SA
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.06 times more return on investment than Longvie SA. However, Transportadora is 1.06 times more volatile than Longvie SA. It trades about 0.11 of its potential returns per unit of risk. Longvie SA is currently generating about 0.11 per unit of risk. If you would invest 445,170 in Transportadora de Gas on September 3, 2024 and sell it today you would earn a total of 214,830 from holding Transportadora de Gas or generate 48.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. Longvie SA
Performance |
| Timeline |
| Transportadora de Gas |
| Longvie SA |
Transportadora and Longvie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Longvie SA
The main advantage of trading using opposite Transportadora and Longvie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Longvie 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 Longvie SA will offset losses from the drop in Longvie SA's long position.| Transportadora vs. Longvie SA | Transportadora vs. United States Steel | Transportadora vs. Capex SA | Transportadora vs. Pfizer Inc |
| Longvie SA vs. Transportadora de Gas | Longvie SA vs. Harmony Gold Mining | Longvie SA vs. Compania de Transporte | Longvie SA vs. Telecom Argentina |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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