Correlation Between Savoy Energy and Transportadora

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

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

Diversification Opportunities for Savoy Energy and Transportadora

0.0

Correlation Coefficient

Savoy Energy  Transportadora

Pay attention - limited upside

The 3 months correlation between Savoy and Transportadora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Savoy Energy Corp 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 Savoy Energy 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 Savoy Energy Corp 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 Savoy Energy i.e., Savoy Energy and Transportadora go up and down completely randomly.

Pair Corralation between Savoy Energy and Transportadora

Given the investment horizon of 90 days Savoy Energy Corp is expected to generate 13.14 times more return on investment than Transportadora. However, Savoy Energy is 13.14 times more volatile than Transportadora de Gas. It trades about 0.04 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.07 per unit of risk. If you would invest  0.01  in Savoy Energy Corp on October 26, 2024 and sell it today you would lose  0.00  from holding Savoy Energy Corp or give up 0.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Savoy Energy Corp  vs.  Transportadora de Gas

Savoy Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Savoy Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Savoy Energy is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Transportadora de Gas

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 11 (%) 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 Savoy Energy and Transportadora

The main advantage of trading using opposite Savoy Energy and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Savoy Energy 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 Savoy Energy Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.