Correlation Between Gaztransport Technigaz and Novatech Industries

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

Diversification Opportunities for Gaztransport Technigaz and Novatech Industries

0.0

Correlation Coefficient

Gaztransport Technigaz  Novatech Industries

Pay attention - limited upside

The 3 months correlation between Gaztransport and Novatech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SAS and Novatech Industries SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novatech Industries 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 Novatech Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novatech Industries has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Novatech Industries go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Novatech Industries

If you would invest  12,910  in Gaztransport Technigaz SAS on October 21, 2024 and sell it today you would earn a total of  1,460  from holding Gaztransport Technigaz SAS or generate 11.31% return on investment over 90 days.

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

Gaztransport Technigaz SAS  vs.  Novatech Industries SA

Gaztransport Technigaz

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 12 (%) 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.

Novatech Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Novatech Industries SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Novatech Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gaztransport Technigaz and Novatech Industries

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

The idea behind Gaztransport Technigaz SAS and Novatech Industries 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.