Correlation Between Goodbye Kansas and Transtema Group

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

By analyzing existing cross correlation between Goodbye Kansas Group and Transtema Group AB, you can compare the effects of market volatilities on Goodbye Kansas and Transtema Group 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 Goodbye Kansas with a short position of Transtema Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodbye Kansas and Transtema Group.

Diversification Opportunities for Goodbye Kansas and Transtema Group

-0.07

Correlation Coefficient

Goodbye Kansas  Transtema Group

Good diversification

The 3 months correlation between Goodbye and Transtema is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Goodbye Kansas Group and Transtema Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transtema Group AB and Goodbye Kansas 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 Goodbye Kansas Group are associated (or correlated) with Transtema Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transtema Group AB has no effect on the direction of Goodbye Kansas i.e., Goodbye Kansas and Transtema Group go up and down completely randomly.

Pair Corralation between Goodbye Kansas and Transtema Group

Assuming the 90 days trading horizon Goodbye Kansas Group is expected to generate 5.33 times more return on investment than Transtema Group. However, Goodbye Kansas is 5.33 times more volatile than Transtema Group AB. It trades about 0.27 of its potential returns per unit of risk. Transtema Group AB is currently generating about -0.07 per unit of risk. If you would invest  147.00  in Goodbye Kansas Group on December 24, 2024 and sell it today you would earn a total of  333.00  from holding Goodbye Kansas Group or generate 226.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Goodbye Kansas Group  vs.  Transtema Group AB

Goodbye Kansas Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goodbye Kansas Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Goodbye Kansas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Transtema Group AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transtema Group AB 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.

Pair Trading with Goodbye Kansas and Transtema Group

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

The idea behind Goodbye Kansas Group and Transtema Group AB 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.