Correlation Between Monks Investment and Gaztransport

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

By analyzing existing cross correlation between Monks Investment Trust and Gaztransport et Technigaz, you can compare the effects of market volatilities on Monks Investment and Gaztransport 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 Monks Investment with a short position of Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Gaztransport.

Diversification Opportunities for Monks Investment and Gaztransport

0.02

Correlation Coefficient

Monks Investment  Gaztransport

Significant diversification

The 3 months correlation between Monks and Gaztransport is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz and Monks Investment 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 Monks Investment Trust are associated (or correlated) with Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Monks Investment i.e., Monks Investment and Gaztransport go up and down completely randomly.

Pair Corralation between Monks Investment and Gaztransport

Assuming the 90 days trading horizon Monks Investment Trust is expected to under-perform the Gaztransport. But the stock apears to be less risky and, when comparing its historical volatility, Monks Investment Trust is 2.1 times less risky than Gaztransport. The stock trades about -0.03 of its potential returns per unit of risk. The Gaztransport et Technigaz is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,961  in Gaztransport et Technigaz on December 26, 2024 and sell it today you would earn a total of  1,704  from holding Gaztransport et Technigaz or generate 13.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Monks Investment Trust  vs.  Gaztransport et Technigaz

Monks Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monks Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Monks Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Gaztransport et Technigaz

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gaztransport unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monks Investment and Gaztransport

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

The idea behind Monks Investment Trust and Gaztransport et Technigaz 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.