Correlation Between Gaztransport and Heavitree Brewery

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

Diversification Opportunities for Gaztransport and Heavitree Brewery

-0.42

Correlation Coefficient

Gaztransport  Heavitree Brewery

Very good diversification

The 3 months correlation between Gaztransport and Heavitree is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery 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 Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Gaztransport i.e., Gaztransport and Heavitree Brewery go up and down completely randomly.

Pair Corralation between Gaztransport and Heavitree Brewery

Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to generate 3.27 times more return on investment than Heavitree Brewery. However, Gaztransport is 3.27 times more volatile than Heavitree Brewery. It trades about 0.15 of its potential returns per unit of risk. Heavitree Brewery is currently generating about -0.13 per unit of risk. If you would invest  12,794  in Gaztransport et Technigaz on October 24, 2024 and sell it today you would earn a total of  1,686  from holding Gaztransport et Technigaz or generate 13.18% return on investment over 90 days.

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

Gaztransport et Technigaz  vs.  Heavitree Brewery

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.

Heavitree Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heavitree Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gaztransport and Heavitree Brewery

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

The idea behind Gaztransport et Technigaz and Heavitree Brewery 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.