Correlation Between Gaztransport Technigaz and Broadpeak

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

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

Diversification Opportunities for Gaztransport Technigaz and Broadpeak

-0.33

Correlation Coefficient

Gaztransport Technigaz  Broadpeak

Very good diversification

The 3 months correlation between Gaztransport and Broadpeak is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SAS and Broadpeak SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadpeak SA and Gaztransport Technigaz 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 Gaztransport Technigaz SAS are associated (or correlated) with Broadpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadpeak SA has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Broadpeak go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Broadpeak

Assuming the 90 days trading horizon Gaztransport Technigaz SAS is expected to generate 0.47 times more return on investment than Broadpeak. However, Gaztransport Technigaz SAS is 2.11 times less risky than Broadpeak. It trades about 0.12 of its potential returns per unit of risk. Broadpeak SA is currently generating about -0.16 per unit of risk. If you would invest  12,672  in Gaztransport Technigaz SAS on October 24, 2024 and sell it today you would earn a total of  1,788  from holding Gaztransport Technigaz SAS or generate 14.11% return on investment over 90 days.

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

Gaztransport Technigaz SAS  vs.  Broadpeak SA

Gaztransport Technigaz

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gaztransport Technigaz sustained solid returns over the last few months and may actually be approaching a breakup point.

Broadpeak SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Gaztransport Technigaz and Broadpeak

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

The idea behind Gaztransport Technigaz SAS and Broadpeak SA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.