Correlation Between Gaztransport Technigaz and United Airlines

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

Diversification Opportunities for Gaztransport Technigaz and United Airlines

-0.1

Correlation Coefficient

Gaztransport Technigaz  United Airlines

Good diversification

The 3 months correlation between Gaztransport and United is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and United Airlines go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and United Airlines

Assuming the 90 days horizon Gaztransport Technigaz SA is expected to generate 0.73 times more return on investment than United Airlines. However, Gaztransport Technigaz SA is 1.36 times less risky than United Airlines. It trades about 0.07 of its potential returns per unit of risk. United Airlines Holdings is currently generating about -0.1 per unit of risk. If you would invest  12,980  in Gaztransport Technigaz SA on December 29, 2024 and sell it today you would earn a total of  1,300  from holding Gaztransport Technigaz SA or generate 10.02% 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.  United Airlines Holdings

Gaztransport Technigaz

Risk-Adjusted Performance

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 April 2025.

United Airlines Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Airlines Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential 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 United Airlines

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

The idea behind Gaztransport Technigaz SA and United Airlines Holdings 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.