Correlation Between Gaztransport Technigaz and INDIKA ENERGY

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

Diversification Opportunities for Gaztransport Technigaz and INDIKA ENERGY

0.22

Correlation Coefficient

Gaztransport Technigaz  INDIKA ENERGY

Modest diversification

The 3 months correlation between Gaztransport and INDIKA is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and INDIKA ENERGY

Assuming the 90 days horizon Gaztransport Technigaz SA is expected to generate 0.46 times more return on investment than INDIKA ENERGY. However, Gaztransport Technigaz SA is 2.18 times less risky than INDIKA ENERGY. It trades about 0.13 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about 0.04 per unit of risk. If you would invest  12,880  in Gaztransport Technigaz SA on October 26, 2024 and sell it today you would earn a total of  1,880  from holding Gaztransport Technigaz SA or generate 14.6% return on investment over 90 days.

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

Gaztransport Technigaz SA  vs.  INDIKA ENERGY

Gaztransport Technigaz

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gaztransport Technigaz reported solid returns over the last few months and may actually be approaching a breakup point.

INDIKA ENERGY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INDIKA ENERGY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, INDIKA ENERGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gaztransport Technigaz and INDIKA ENERGY

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

The idea behind Gaztransport Technigaz SA and INDIKA ENERGY 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.