Correlation Between Transportadora and Compania
Can any of the company-specific risk be diversified away by investing in both Transportadora and Compania 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 Compania 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 Compania de Transporte, you can compare the effects of market volatilities on Transportadora and Compania 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 Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Compania.
Diversification Opportunities for Transportadora and Compania
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transportadora and Compania is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Transportadora i.e., Transportadora and Compania go up and down completely randomly.
Pair Corralation between Transportadora and Compania
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.17 times more return on investment than Compania. However, Transportadora is 1.17 times more volatile than Compania de Transporte. It trades about 0.09 of its potential returns per unit of risk. Compania de Transporte is currently generating about -0.25 per unit of risk. If you would invest 637,000 in Transportadora de Gas on October 20, 2024 and sell it today you would earn a total of 35,000 from holding Transportadora de Gas or generate 5.49% 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. Compania de Transporte
Performance |
| Timeline |
| Transportadora de Gas |
| Compania de Transporte |
Transportadora and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Compania
The main advantage of trading using opposite Transportadora and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania's long position.| Transportadora vs. Agrometal SAI | Transportadora vs. Harmony Gold Mining | Transportadora vs. Compania de Transporte | Transportadora vs. United States Steel |
| Compania vs. Pampa Energia SA | Compania vs. American Express Co | Compania vs. Transportadora de Gas | Compania vs. Central Puerto SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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