Correlation Between Gaztransport Technigaz and ITALIAN WINE

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

Diversification Opportunities for Gaztransport Technigaz and ITALIAN WINE

-0.25

Correlation Coefficient

Gaztransport Technigaz  ITALIAN WINE

Very good diversification

The 3 months correlation between Gaztransport and ITALIAN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and ITALIAN WINE go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and ITALIAN WINE

Assuming the 90 days horizon Gaztransport Technigaz SA is expected to generate 0.98 times more return on investment than ITALIAN WINE. However, Gaztransport Technigaz SA is 1.02 times less risky than ITALIAN WINE. It trades about 0.08 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about -0.09 per unit of risk. If you would invest  12,910  in Gaztransport Technigaz SA on December 25, 2024 and sell it today you would earn a total of  1,620  from holding Gaztransport Technigaz SA or generate 12.55% 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.  ITALIAN WINE BRANDS

Gaztransport Technigaz

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 6 (%) 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.

ITALIAN WINE BRANDS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITALIAN WINE BRANDS 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gaztransport Technigaz and ITALIAN WINE

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

The idea behind Gaztransport Technigaz SA and ITALIAN WINE BRANDS 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.