Correlation Between TSOGO SUN and GALP ENERGIA

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

By analyzing existing cross correlation between TSOGO SUN GAMING and GALP ENERGIA B , you can compare the effects of market volatilities on TSOGO SUN and GALP ENERGIA 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 TSOGO SUN with a short position of GALP ENERGIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TSOGO SUN and GALP ENERGIA.

Diversification Opportunities for TSOGO SUN and GALP ENERGIA

0.39

Correlation Coefficient

TSOGO SUN  GALP ENERGIA

Weak diversification

The 3 months correlation between TSOGO and GALP is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TSOGO SUN GAMING and GALP ENERGIA B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GALP ENERGIA B and TSOGO SUN 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 TSOGO SUN GAMING are associated (or correlated) with GALP ENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GALP ENERGIA B has no effect on the direction of TSOGO SUN i.e., TSOGO SUN and GALP ENERGIA go up and down completely randomly.

Pair Corralation between TSOGO SUN and GALP ENERGIA

Assuming the 90 days horizon TSOGO SUN GAMING is expected to under-perform the GALP ENERGIA. In addition to that, TSOGO SUN is 1.34 times more volatile than GALP ENERGIA B . It trades about -0.12 of its total potential returns per unit of risk. GALP ENERGIA B is currently generating about -0.04 per unit of volatility. If you would invest  1,630  in GALP ENERGIA B on December 27, 2024 and sell it today you would lose (106.00) from holding GALP ENERGIA B or give up 6.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

TSOGO SUN GAMING  vs.  GALP ENERGIA B

TSOGO SUN GAMING

Risk-Adjusted Performance

Very Weak

Over the last 90 days TSOGO SUN GAMING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GALP ENERGIA B

Risk-Adjusted Performance

Very Weak

Over the last 90 days GALP ENERGIA B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GALP ENERGIA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TSOGO SUN and GALP ENERGIA

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

The idea behind TSOGO SUN GAMING and GALP ENERGIA B 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.