Correlation Between FC Investment and Gaztransport

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Can any of the company-specific risk be diversified away by investing in both FC Investment 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 FC Investment and Gaztransport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and Gaztransport et Technigaz, you can compare the effects of market volatilities on FC Investment 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 FC Investment with a short position of Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Gaztransport.

Diversification Opportunities for FC Investment and Gaztransport

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between FCIT and Gaztransport is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust 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 FC Investment 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 FC Investment Trust 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 FC Investment i.e., FC Investment and Gaztransport go up and down completely randomly.

Pair Corralation between FC Investment and Gaztransport

Assuming the 90 days trading horizon FC Investment is expected to generate 3.5 times less return on investment than Gaztransport. But when comparing it to its historical volatility, FC Investment Trust is 3.02 times less risky than Gaztransport. It trades about 0.07 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  13,411  in Gaztransport et Technigaz on November 29, 2024 and sell it today you would earn a total of  1,529  from holding Gaztransport et Technigaz or generate 11.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.39%
ValuesDaily Returns

FC Investment Trust  vs.  Gaztransport et Technigaz

 Performance 
       Timeline  
FC Investment Trust 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FC Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Gaztransport et Technigaz 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 6 (%) 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.

FC Investment and Gaztransport Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FC Investment and Gaztransport

The main advantage of trading using opposite FC Investment and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment 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 FC Investment Trust 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.
Check out your portfolio center.
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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