Correlation Between SBC Medical and Transportadora

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

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

Diversification Opportunities for SBC Medical and Transportadora

0.7

Correlation Coefficient

SBC Medical  Transportadora

Poor diversification

The 3 months correlation between SBC and Transportadora is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SBC Medical Group 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 SBC Medical 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 SBC Medical Group 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 SBC Medical i.e., SBC Medical and Transportadora go up and down completely randomly.

Pair Corralation between SBC Medical and Transportadora

Assuming the 90 days horizon SBC Medical Group is expected to generate 2.82 times more return on investment than Transportadora. However, SBC Medical is 2.82 times more volatile than Transportadora de Gas. It trades about 0.06 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.12 per unit of risk. If you would invest  26.00  in SBC Medical Group on September 22, 2024 and sell it today you would earn a total of  1.00  from holding SBC Medical Group or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

SBC Medical Group  vs.  Transportadora de Gas

SBC Medical Group

Risk-Adjusted Performance

12 of 100

Good

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

Transportadora de Gas

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 14 (%) 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 SBC Medical and Transportadora

The main advantage of trading using opposite SBC Medical and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBC Medical 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 SBC Medical Group 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.