Correlation Between Capital Drilling and Gaztransport

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

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

Diversification Opportunities for Capital Drilling and Gaztransport

-0.3

Correlation Coefficient

Capital Drilling  Gaztransport

Very good diversification

The 3 months correlation between Capital and Gaztransport is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz and Capital Drilling 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 Capital Drilling are associated (or correlated) with Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Capital Drilling i.e., Capital Drilling and Gaztransport go up and down completely randomly.

Pair Corralation between Capital Drilling and Gaztransport

Assuming the 90 days trading horizon Capital Drilling is expected to under-perform the Gaztransport. In addition to that, Capital Drilling is 1.77 times more volatile than Gaztransport et Technigaz. It trades about -0.05 of its total potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.17 per unit of volatility. If you would invest  12,784  in Gaztransport et Technigaz on October 25, 2024 and sell it today you would earn a total of  1,961  from holding Gaztransport et Technigaz or generate 15.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Capital Drilling  vs.  Gaztransport et Technigaz

Capital Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Gaztransport et Technigaz

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gaztransport unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Drilling and Gaztransport

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

The idea behind Capital Drilling and Gaztransport et Technigaz 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.