Correlation Between WK Kellogg and Transportadora

Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Transportadora 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 WK Kellogg and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WK Kellogg Co and Transportadora de Gas, you can compare the effects of market volatilities on WK Kellogg and Transportadora 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 WK Kellogg with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Transportadora.

Diversification Opportunities for WK Kellogg and Transportadora

0.29

Correlation Coefficient

WK Kellogg  Transportadora

Modest diversification

The 3 months correlation between KLG and Transportadora is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and WK Kellogg 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 WK Kellogg Co are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of WK Kellogg i.e., WK Kellogg and Transportadora go up and down completely randomly.

Pair Corralation between WK Kellogg and Transportadora

Considering the 90-day investment horizon WK Kellogg is expected to generate 39.73 times less return on investment than Transportadora. In addition to that, WK Kellogg is 1.16 times more volatile than Transportadora de Gas. It trades about 0.0 of its total potential returns per unit of risk. Transportadora de Gas is currently generating about 0.2 per unit of volatility. If you would invest  2,088  in Transportadora de Gas on October 23, 2024 and sell it today you would earn a total of  851.00  from holding Transportadora de Gas or generate 40.76% return on investment over 90 days.

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

WK Kellogg Co  vs.  Transportadora de Gas

WK Kellogg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WK Kellogg Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, WK Kellogg is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Transportadora de Gas

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WK Kellogg and Transportadora

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

The idea behind WK Kellogg Co and Transportadora de Gas 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.