Correlation Between RYANAIR HLDGS and Gaztransport Technigaz

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

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

Diversification Opportunities for RYANAIR HLDGS and Gaztransport Technigaz

0.36

Correlation Coefficient

RYANAIR HLDGS  Gaztransport Technigaz

Weak diversification

The 3 months correlation between RYANAIR and Gaztransport is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding RYANAIR HLDGS ADR and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and RYANAIR HLDGS 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 RYANAIR HLDGS ADR are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of RYANAIR HLDGS i.e., RYANAIR HLDGS and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between RYANAIR HLDGS and Gaztransport Technigaz

Assuming the 90 days trading horizon RYANAIR HLDGS ADR is expected to under-perform the Gaztransport Technigaz. But the stock apears to be less risky and, when comparing its historical volatility, RYANAIR HLDGS ADR is 1.37 times less risky than Gaztransport Technigaz. The stock trades about 0.0 of its potential returns per unit of risk. The Gaztransport Technigaz SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  12,780  in Gaztransport Technigaz SA on December 23, 2024 and sell it today you would earn a total of  1,890  from holding Gaztransport Technigaz SA or generate 14.79% return on investment over 90 days.

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

RYANAIR HLDGS ADR  vs.  Gaztransport Technigaz SA

RYANAIR HLDGS ADR

Risk-Adjusted Performance

Very Weak

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

Gaztransport Technigaz

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gaztransport Technigaz reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RYANAIR HLDGS and Gaztransport Technigaz

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

The idea behind RYANAIR HLDGS ADR and Gaztransport Technigaz 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.