Correlation Between Mauna Kea and Gaztransport Technigaz

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

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

Diversification Opportunities for Mauna Kea and Gaztransport Technigaz

0.19

Correlation Coefficient

Mauna Kea  Gaztransport Technigaz

Average diversification

The 3 months correlation between Mauna and Gaztransport is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Mauna Kea Technologies and Gaztransport Technigaz SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and Mauna Kea 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 Mauna Kea Technologies 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 Mauna Kea i.e., Mauna Kea and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between Mauna Kea and Gaztransport Technigaz

Assuming the 90 days trading horizon Mauna Kea is expected to generate 1.45 times less return on investment than Gaztransport Technigaz. In addition to that, Mauna Kea is 1.22 times more volatile than Gaztransport Technigaz SAS. It trades about 0.05 of its total potential returns per unit of risk. Gaztransport Technigaz SAS is currently generating about 0.08 per unit of volatility. If you would invest  12,980  in Gaztransport Technigaz SAS on December 25, 2024 and sell it today you would earn a total of  1,580  from holding Gaztransport Technigaz SAS or generate 12.17% return on investment over 90 days.

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

Mauna Kea Technologies  vs.  Gaztransport Technigaz SAS

Mauna Kea Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mauna Kea Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Mauna Kea may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gaztransport Technigaz

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gaztransport Technigaz sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mauna Kea and Gaztransport Technigaz

The main advantage of trading using opposite Mauna Kea and Gaztransport Technigaz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mauna Kea 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 Mauna Kea Technologies 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.