Correlation Between Gaztransport Technigaz and Avenir Telecom

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

Diversification Opportunities for Gaztransport Technigaz and Avenir Telecom

-0.39

Correlation Coefficient

Gaztransport Technigaz  Avenir Telecom

Very good diversification

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

Pair Corralation between Gaztransport Technigaz and Avenir Telecom

Assuming the 90 days trading horizon Gaztransport Technigaz SAS is expected to generate 0.52 times more return on investment than Avenir Telecom. However, Gaztransport Technigaz SAS is 1.93 times less risky than Avenir Telecom. It trades about 0.03 of its potential returns per unit of risk. Avenir Telecom SA is currently generating about -0.16 per unit of risk. If you would invest  12,603  in Gaztransport Technigaz SAS on September 26, 2024 and sell it today you would earn a total of  227.00  from holding Gaztransport Technigaz SAS or generate 1.8% 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.  Avenir Telecom SA

Gaztransport Technigaz

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gaztransport Technigaz is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Avenir Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avenir Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gaztransport Technigaz and Avenir Telecom

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

The idea behind Gaztransport Technigaz SAS and Avenir Telecom 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.