Correlation Between Gaztransport Technigaz and Strategic Investments

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

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

Diversification Opportunities for Gaztransport Technigaz and Strategic Investments

-0.24

Correlation Coefficient

Gaztransport Technigaz  Strategic Investments

Very good diversification

The 3 months correlation between Gaztransport and Strategic is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments and Gaztransport Technigaz 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 Technigaz SA are associated (or correlated) with Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Strategic Investments go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Strategic Investments

Assuming the 90 days horizon Gaztransport Technigaz is expected to generate 2.23 times less return on investment than Strategic Investments. But when comparing it to its historical volatility, Gaztransport Technigaz SA is 2.91 times less risky than Strategic Investments. It trades about 0.05 of its potential returns per unit of risk. Strategic Investments AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8.74  in Strategic Investments AS on September 19, 2024 and sell it today you would earn a total of  3.26  from holding Strategic Investments AS or generate 37.3% return on investment over 90 days.

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

Gaztransport Technigaz SA  vs.  Strategic Investments AS

Gaztransport Technigaz

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaztransport Technigaz is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Strategic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gaztransport Technigaz and Strategic Investments

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

The idea behind Gaztransport Technigaz SA and Strategic Investments AS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.