Correlation Between Carnegie Clean and Transportadora

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

By analyzing existing cross correlation between Carnegie Clean Energy and Transportadora de Gas, you can compare the effects of market volatilities on Carnegie Clean and Transportadora 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 Carnegie Clean with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and Transportadora.

Diversification Opportunities for Carnegie Clean and Transportadora

0.28

Correlation Coefficient

Carnegie Clean  Transportadora

Modest diversification

The 3 months correlation between Carnegie and Transportadora is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Transportadora go up and down completely randomly.

Pair Corralation between Carnegie Clean and Transportadora

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to under-perform the Transportadora. But the stock apears to be less risky and, when comparing its historical volatility, Carnegie Clean Energy is 1.75 times less risky than Transportadora. The stock trades about 0.0 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,740  in Transportadora de Gas on October 7, 2024 and sell it today you would earn a total of  1,460  from holding Transportadora de Gas or generate 83.91% return on investment over 90 days.

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

Carnegie Clean Energy  vs.  Transportadora de Gas

Carnegie Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Carnegie Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Transportadora de Gas

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Transportadora reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnegie Clean and Transportadora

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

The idea behind Carnegie Clean Energy and Transportadora de Gas 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.