Correlation Between Gaztransport Technigaz and Omega Healthcare

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

Diversification Opportunities for Gaztransport Technigaz and Omega Healthcare

0.61

Correlation Coefficient

Gaztransport Technigaz  Omega Healthcare

Poor diversification

The 3 months correlation between Gaztransport and Omega is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and Omega Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv 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 Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Omega Healthcare go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Omega Healthcare

Assuming the 90 days horizon Gaztransport Technigaz SA is expected to generate 1.55 times more return on investment than Omega Healthcare. However, Gaztransport Technigaz is 1.55 times more volatile than Omega Healthcare Investors. It trades about 0.22 of its potential returns per unit of risk. Omega Healthcare Investors is currently generating about -0.2 per unit of risk. If you would invest  12,950  in Gaztransport Technigaz SA on October 11, 2024 and sell it today you would earn a total of  1,060  from holding Gaztransport Technigaz SA or generate 8.19% return on investment over 90 days.

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

Gaztransport Technigaz SA  vs.  Omega Healthcare Investors

Gaztransport Technigaz

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 7 (%) 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.

Omega Healthcare Inv

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Healthcare Investors are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Omega Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gaztransport Technigaz and Omega Healthcare

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

The idea behind Gaztransport Technigaz SA and Omega Healthcare Investors 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.