Correlation Between Pharnext and Gaztransport Technigaz

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

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

Diversification Opportunities for Pharnext and Gaztransport Technigaz

0.0

Correlation Coefficient

Pharnext  Gaztransport Technigaz

Pay attention - limited upside

The 3 months correlation between Pharnext and Gaztransport is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pharnext SA and Gaztransport Technigaz SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and Pharnext 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 Pharnext SA 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 Pharnext i.e., Pharnext and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between Pharnext and Gaztransport Technigaz

Assuming the 90 days trading horizon Pharnext SA is expected to under-perform the Gaztransport Technigaz. In addition to that, Pharnext is 18.19 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 0.05 per unit of volatility. If you would invest  8,747  in Gaztransport Technigaz SAS on September 26, 2024 and sell it today you would earn a total of  4,083  from holding Gaztransport Technigaz SAS or generate 46.68% return on investment over 90 days.

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

Pharnext SA  vs.  Gaztransport Technigaz SAS

Pharnext SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharnext SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pharnext is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Gaztransport Technigaz

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gaztransport Technigaz is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pharnext and Gaztransport Technigaz

The main advantage of trading using opposite Pharnext and Gaztransport Technigaz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pharnext 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 Pharnext SA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.