Correlation Between Gaztransport Technigaz and Ekinops SA

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

Diversification Opportunities for Gaztransport Technigaz and Ekinops SA

0.2

Correlation Coefficient

Gaztransport Technigaz  Ekinops SA

Modest diversification

The 3 months correlation between Gaztransport and Ekinops is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SAS and Ekinops SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekinops 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 Ekinops SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekinops SA has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Ekinops SA go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Ekinops SA

Assuming the 90 days trading horizon Gaztransport Technigaz SAS is expected to generate 0.44 times more return on investment than Ekinops SA. However, Gaztransport Technigaz SAS is 2.26 times less risky than Ekinops SA. It trades about 0.06 of its potential returns per unit of risk. Ekinops SA is currently generating about 0.0 per unit of risk. If you would invest  13,140  in Gaztransport Technigaz SAS on September 2, 2024 and sell it today you would earn a total of  630.00  from holding Gaztransport Technigaz SAS or generate 4.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gaztransport Technigaz SAS  vs.  Ekinops SA

Gaztransport Technigaz

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 4 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Ekinops SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ekinops SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Ekinops SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gaztransport Technigaz and Ekinops SA

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

The idea behind Gaztransport Technigaz SAS and Ekinops 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.