Correlation Between Gaztransport Technigaz and GOLD ROAD

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

Diversification Opportunities for Gaztransport Technigaz and GOLD ROAD

0.13

Correlation Coefficient

Gaztransport Technigaz  GOLD ROAD

Average diversification

The 3 months correlation between Gaztransport and GOLD is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and GOLD ROAD go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and GOLD ROAD

Assuming the 90 days horizon Gaztransport Technigaz SA is expected to generate 0.63 times more return on investment than GOLD ROAD. However, Gaztransport Technigaz SA is 1.6 times less risky than GOLD ROAD. It trades about 0.05 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.03 per unit of risk. If you would invest  9,498  in Gaztransport Technigaz SA on October 8, 2024 and sell it today you would earn a total of  3,952  from holding Gaztransport Technigaz SA or generate 41.61% return on investment over 90 days.

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

Gaztransport Technigaz SA  vs.  GOLD ROAD RES

Gaztransport Technigaz

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gaztransport Technigaz may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GOLD ROAD RES

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Gaztransport Technigaz and GOLD ROAD

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

The idea behind Gaztransport Technigaz SA and GOLD ROAD RES 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.