Correlation Between TOTAL GABON and GRUPO CARSO-A1

Can any of the company-specific risk be diversified away by investing in both TOTAL GABON and GRUPO CARSO-A1 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 TOTAL GABON and GRUPO CARSO-A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TOTAL GABON and GRUPO CARSO A1, you can compare the effects of market volatilities on TOTAL GABON and GRUPO CARSO-A1 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 TOTAL GABON with a short position of GRUPO CARSO-A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and GRUPO CARSO-A1.

Diversification Opportunities for TOTAL GABON and GRUPO CARSO-A1

0.03

Correlation Coefficient

TOTAL GABON  GRUPO CARSO-A1

Significant diversification

The 3 months correlation between TOTAL and GRUPO is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 and TOTAL GABON 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 TOTAL GABON are associated (or correlated) with GRUPO CARSO-A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and GRUPO CARSO-A1 go up and down completely randomly.

Pair Corralation between TOTAL GABON and GRUPO CARSO-A1

Assuming the 90 days trading horizon TOTAL GABON is expected to generate 2.12 times more return on investment than GRUPO CARSO-A1. However, TOTAL GABON is 2.12 times more volatile than GRUPO CARSO A1. It trades about 0.16 of its potential returns per unit of risk. GRUPO CARSO A1 is currently generating about -0.01 per unit of risk. If you would invest  11,748  in TOTAL GABON on December 29, 2024 and sell it today you would earn a total of  7,202  from holding TOTAL GABON or generate 61.3% return on investment over 90 days.

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

TOTAL GABON  vs.  GRUPO CARSO A1

TOTAL GABON

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL GABON are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TOTAL GABON exhibited solid returns over the last few months and may actually be approaching a breakup point.

GRUPO CARSO A1

Risk-Adjusted Performance

Very Weak

Over the last 90 days GRUPO CARSO A1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GRUPO CARSO-A1 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TOTAL GABON and GRUPO CARSO-A1

The main advantage of trading using opposite TOTAL GABON and GRUPO CARSO-A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON position performs unexpectedly, GRUPO CARSO-A1 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 GRUPO CARSO-A1 will offset losses from the drop in GRUPO CARSO-A1's long position.

The idea behind TOTAL GABON and GRUPO CARSO A1 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.