Correlation Between Gaztransport and John Wood

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

Diversification Opportunities for Gaztransport and John Wood

-0.84

Correlation Coefficient

Gaztransport  John Wood

Pay attention - limited upside

The 3 months correlation between Gaztransport and John is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and John Wood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wood Group 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 John Wood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wood Group has no effect on the direction of Gaztransport i.e., Gaztransport and John Wood go up and down completely randomly.

Pair Corralation between Gaztransport and John Wood

Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to under-perform the John Wood. But the stock apears to be less risky and, when comparing its historical volatility, Gaztransport et Technigaz is 3.71 times less risky than John Wood. The stock trades about -0.12 of its potential returns per unit of risk. The John Wood Group is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  5,275  in John Wood Group on September 17, 2024 and sell it today you would earn a total of  1,675  from holding John Wood Group or generate 31.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Gaztransport et Technigaz  vs.  John Wood Group

Gaztransport et Technigaz

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 5 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

John Wood Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Wood Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gaztransport and John Wood

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

The idea behind Gaztransport et Technigaz and John Wood Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.