Correlation Between Gaztransport Technigaz and Charwood Energy

Can any of the company-specific risk be diversified away by investing in both Gaztransport Technigaz and Charwood Energy 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 Charwood Energy 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 Charwood Energy SA, you can compare the effects of market volatilities on Gaztransport Technigaz and Charwood Energy 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 Charwood Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport Technigaz and Charwood Energy.

Diversification Opportunities for Gaztransport Technigaz and Charwood Energy

-0.12

Correlation Coefficient

Gaztransport Technigaz  Charwood Energy

Good diversification

The 3 months correlation between Gaztransport and Charwood is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SAS and Charwood Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charwood Energy 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 Charwood Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charwood Energy SA has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Charwood Energy go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Charwood Energy

Assuming the 90 days trading horizon Gaztransport Technigaz SAS is expected to generate 0.71 times more return on investment than Charwood Energy. However, Gaztransport Technigaz SAS is 1.4 times less risky than Charwood Energy. It trades about 0.06 of its potential returns per unit of risk. Charwood Energy SA is currently generating about -0.09 per unit of risk. If you would invest  9,143  in Gaztransport Technigaz SAS on October 10, 2024 and sell it today you would earn a total of  4,937  from holding Gaztransport Technigaz SAS or generate 54.0% 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.  Charwood Energy SA

Gaztransport Technigaz

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gaztransport Technigaz may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Charwood Energy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charwood Energy SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Gaztransport Technigaz and Charwood Energy

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

The idea behind Gaztransport Technigaz SAS and Charwood Energy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.