Correlation Between BTG Pactual and Transocean

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

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

Diversification Opportunities for BTG Pactual and Transocean

0.14

Correlation Coefficient

BTG Pactual  Transocean

Average diversification

The 3 months correlation between BTG and Transocean is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean and BTG Pactual 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 BTG Pactual Logstica are associated (or correlated) with Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of BTG Pactual i.e., BTG Pactual and Transocean go up and down completely randomly.

Pair Corralation between BTG Pactual and Transocean

Assuming the 90 days trading horizon BTG Pactual is expected to generate 1.09 times less return on investment than Transocean. But when comparing it to its historical volatility, BTG Pactual Logstica is 4.11 times less risky than Transocean. It trades about 0.01 of its potential returns per unit of risk. Transocean is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,953  in Transocean on October 5, 2024 and sell it today you would lose (513.00) from holding Transocean or give up 17.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

BTG Pactual Logstica  vs.  Transocean

BTG Pactual Logstica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTG Pactual Logstica has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong essential indicators, BTG Pactual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transocean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Transocean is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BTG Pactual and Transocean

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

The idea behind BTG Pactual Logstica and Transocean 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.