Correlation Between Gaztransport and GoldMining

Can any of the company-specific risk be diversified away by investing in both Gaztransport and GoldMining 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 Gaztransport and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gaztransport et Technigaz and GoldMining, you can compare the effects of market volatilities on Gaztransport and GoldMining 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 Gaztransport with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and GoldMining.

Diversification Opportunities for Gaztransport and GoldMining

0.08

Correlation Coefficient

Gaztransport  GoldMining

Significant diversification

The 3 months correlation between Gaztransport and GoldMining is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Gaztransport 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 Gaztransport et Technigaz are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Gaztransport i.e., Gaztransport and GoldMining go up and down completely randomly.

Pair Corralation between Gaztransport and GoldMining

Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to generate 0.48 times more return on investment than GoldMining. However, Gaztransport et Technigaz is 2.1 times less risky than GoldMining. It trades about 0.06 of its potential returns per unit of risk. GoldMining is currently generating about 0.02 per unit of risk. If you would invest  12,840  in Gaztransport et Technigaz on September 3, 2024 and sell it today you would earn a total of  605.00  from holding Gaztransport et Technigaz or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.23%
Values	Daily Returns

Gaztransport et Technigaz  vs.  GoldMining

Gaztransport et Technigaz

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gaztransport is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GoldMining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GoldMining is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gaztransport and GoldMining

The main advantage of trading using opposite Gaztransport and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.

The idea behind Gaztransport et Technigaz and GoldMining 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.