Correlation Between Gaztransport Technigaz and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both Gaztransport Technigaz and SIMS METAL 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 SIMS METAL 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 SIMS METAL MGT, you can compare the effects of market volatilities on Gaztransport Technigaz and SIMS METAL 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 SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport Technigaz and SIMS METAL.
Diversification Opportunities for Gaztransport Technigaz and SIMS METAL
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gaztransport and SIMS is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT 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 SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and SIMS METAL go up and down completely randomly.
Pair Corralation between Gaztransport Technigaz and SIMS METAL
Assuming the 90 days horizon Gaztransport Technigaz SA is expected to generate 1.01 times more return on investment than SIMS METAL. However, Gaztransport Technigaz is 1.01 times more volatile than SIMS METAL MGT. It trades about -0.2 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about -0.28 per unit of risk. If you would invest 13,785 in Gaztransport Technigaz SA on September 25, 2024 and sell it today you would lose (1,025) from holding Gaztransport Technigaz SA or give up 7.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gaztransport Technigaz SA vs. SIMS METAL MGT
Performance |
Timeline |
Gaztransport Technigaz |
SIMS METAL MGT |
Gaztransport Technigaz and SIMS METAL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gaztransport Technigaz and SIMS METAL
The main advantage of trading using opposite Gaztransport Technigaz and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport Technigaz position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.Gaztransport Technigaz vs. Halliburton | Gaztransport Technigaz vs. Halliburton | Gaztransport Technigaz vs. Baker Hughes Co | Gaztransport Technigaz vs. Tenaris SA |
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Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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