Correlation Between Gaztransport and Bioventix

Can any of the company-specific risk be diversified away by investing in both Gaztransport and Bioventix 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 Bioventix 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 Bioventix, you can compare the effects of market volatilities on Gaztransport and Bioventix 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 Bioventix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and Bioventix.

Diversification Opportunities for Gaztransport and Bioventix

-0.2

Correlation Coefficient

Gaztransport  Bioventix

Good diversification

The 3 months correlation between Gaztransport and Bioventix is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and Bioventix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioventix 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 Bioventix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioventix has no effect on the direction of Gaztransport i.e., Gaztransport and Bioventix go up and down completely randomly.

Pair Corralation between Gaztransport and Bioventix

Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to generate 0.67 times more return on investment than Bioventix. However, Gaztransport et Technigaz is 1.5 times less risky than Bioventix. It trades about 0.47 of its potential returns per unit of risk. Bioventix is currently generating about 0.01 per unit of risk. If you would invest  12,740  in Gaztransport et Technigaz on October 24, 2024 and sell it today you would earn a total of  1,740  from holding Gaztransport et Technigaz or generate 13.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gaztransport et Technigaz  vs.  Bioventix

Gaztransport et Technigaz

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gaztransport unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bioventix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioventix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Gaztransport and Bioventix

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

The idea behind Gaztransport et Technigaz and Bioventix 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.