Correlation Between Bilendi and Gaztransport Technigaz

Can any of the company-specific risk be diversified away by investing in both Bilendi and Gaztransport Technigaz 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 Bilendi and Gaztransport Technigaz into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bilendi and Gaztransport Technigaz SAS, you can compare the effects of market volatilities on Bilendi and Gaztransport Technigaz 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 Bilendi with a short position of Gaztransport Technigaz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilendi and Gaztransport Technigaz.

Diversification Opportunities for Bilendi and Gaztransport Technigaz

-0.53

Correlation Coefficient

Bilendi  Gaztransport Technigaz

Excellent diversification

The 3 months correlation between Bilendi and Gaztransport is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bilendi and Gaztransport Technigaz SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and Bilendi 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 Bilendi are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of Bilendi i.e., Bilendi and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between Bilendi and Gaztransport Technigaz

Assuming the 90 days trading horizon Bilendi is expected to generate 1.49 times more return on investment than Gaztransport Technigaz. However, Bilendi is 1.49 times more volatile than Gaztransport Technigaz SAS. It trades about 0.06 of its potential returns per unit of risk. Gaztransport Technigaz SAS is currently generating about 0.06 per unit of risk. If you would invest  1,320  in Bilendi on October 5, 2024 and sell it today you would earn a total of  570.00  from holding Bilendi or generate 43.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

Bilendi  vs.  Gaztransport Technigaz SAS

Bilendi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilendi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bilendi reported solid returns over the last few months and may actually be approaching a breakup point.

Gaztransport Technigaz

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gaztransport Technigaz may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bilendi and Gaztransport Technigaz

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

The idea behind Bilendi and Gaztransport Technigaz SAS 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.