Correlation Between Transportadora and TYSNES SPAREBANK

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

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

Diversification Opportunities for Transportadora and TYSNES SPAREBANK

-0.75

Correlation Coefficient

Transportadora  TYSNES SPAREBANK

Pay attention - limited upside

The 3 months correlation between Transportadora and TYSNES is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and TYSNES SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYSNES SPAREBANK and Transportadora 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 Transportadora de Gas are associated (or correlated) with TYSNES SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TYSNES SPAREBANK has no effect on the direction of Transportadora i.e., Transportadora and TYSNES SPAREBANK go up and down completely randomly.

Pair Corralation between Transportadora and TYSNES SPAREBANK

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 4.63 times more return on investment than TYSNES SPAREBANK. However, Transportadora is 4.63 times more volatile than TYSNES SPAREBANK NK. It trades about 0.19 of its potential returns per unit of risk. TYSNES SPAREBANK NK is currently generating about -0.1 per unit of risk. If you would invest  1,690  in Transportadora de Gas on September 29, 2024 and sell it today you would earn a total of  1,050  from holding Transportadora de Gas or generate 62.13% return on investment over 90 days.

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

Transportadora de Gas  vs.  TYSNES SPAREBANK NK

Transportadora de Gas

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Transportadora reported solid returns over the last few months and may actually be approaching a breakup point.

TYSNES SPAREBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TYSNES SPAREBANK NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Transportadora and TYSNES SPAREBANK

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

The idea behind Transportadora de Gas and TYSNES SPAREBANK NK 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.