Correlation Between Gaztransport Technigaz and Placoplatre

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

Diversification Opportunities for Gaztransport Technigaz and Placoplatre

0.27

Correlation Coefficient

Gaztransport Technigaz  Placoplatre

Modest diversification

The 3 months correlation between Gaztransport and Placoplatre is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SAS and Placoplatre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Placoplatre 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 Placoplatre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Placoplatre SA has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Placoplatre go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Placoplatre

Assuming the 90 days trading horizon Gaztransport Technigaz SAS is expected to generate 2.32 times more return on investment than Placoplatre. However, Gaztransport Technigaz is 2.32 times more volatile than Placoplatre SA. It trades about 0.08 of its potential returns per unit of risk. Placoplatre SA is currently generating about 0.05 per unit of risk. If you would invest  12,980  in Gaztransport Technigaz SAS on December 27, 2024 and sell it today you would earn a total of  1,520  from holding Gaztransport Technigaz SAS or generate 11.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Gaztransport Technigaz SAS  vs.  Placoplatre SA

Gaztransport Technigaz

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 6 (%) 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.

Placoplatre SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Placoplatre SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Placoplatre is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gaztransport Technigaz and Placoplatre

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

The idea behind Gaztransport Technigaz SAS and Placoplatre 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.