Correlation Between Caledonia Investments and Gaztransport

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

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

Diversification Opportunities for Caledonia Investments and Gaztransport

0.2

Correlation Coefficient

Caledonia Investments  Gaztransport

Modest diversification

The 3 months correlation between Caledonia and Gaztransport is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments i.e., Caledonia Investments and Gaztransport go up and down completely randomly.

Pair Corralation between Caledonia Investments and Gaztransport

Assuming the 90 days trading horizon Caledonia Investments is expected to generate 2.23 times less return on investment than Gaztransport. But when comparing it to its historical volatility, Caledonia Investments is 2.08 times less risky than Gaztransport. It trades about 0.2 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  13,300  in Gaztransport et Technigaz on October 11, 2024 and sell it today you would earn a total of  870.00  from holding Gaztransport et Technigaz or generate 6.54% return on investment over 90 days.

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

Caledonia Investments  vs.  Gaztransport et Technigaz

Caledonia Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caledonia Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Caledonia Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gaztransport et Technigaz

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gaztransport may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Caledonia Investments and Gaztransport

The main advantage of trading using opposite Caledonia Investments and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments 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 Caledonia Investments 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..