Correlation Between Transportadora and AptarGroup

Can any of the company-specific risk be diversified away by investing in both Transportadora and AptarGroup 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 AptarGroup 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 AptarGroup, you can compare the effects of market volatilities on Transportadora and AptarGroup 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 AptarGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and AptarGroup.

Diversification Opportunities for Transportadora and AptarGroup

0.78

Correlation Coefficient

Transportadora  AptarGroup

Poor diversification

The 3 months correlation between Transportadora and AptarGroup is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup 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 AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Transportadora i.e., Transportadora and AptarGroup go up and down completely randomly.

Pair Corralation between Transportadora and AptarGroup

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 3.14 times more return on investment than AptarGroup. However, Transportadora is 3.14 times more volatile than AptarGroup. It trades about 0.16 of its potential returns per unit of risk. AptarGroup is currently generating about 0.21 per unit of risk. If you would invest  1,830  in Transportadora de Gas on September 12, 2024 and sell it today you would earn a total of  830.00  from holding Transportadora de Gas or generate 45.36% return on investment over 90 days.

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

Transportadora de Gas  vs.  AptarGroup

Transportadora de Gas

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 12 (%) 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.

AptarGroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AptarGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and AptarGroup

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

The idea behind Transportadora de Gas and AptarGroup 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.