Correlation Between Transportadora and Danaher

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

Diversification Opportunities for Transportadora and Danaher

0.63

Correlation Coefficient

Transportadora  Danaher

Poor diversification

The 3 months correlation between Transportadora and Danaher is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher 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 Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of Transportadora i.e., Transportadora and Danaher go up and down completely randomly.

Pair Corralation between Transportadora and Danaher

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 2.65 times more return on investment than Danaher. However, Transportadora is 2.65 times more volatile than Danaher. It trades about -0.04 of its potential returns per unit of risk. Danaher is currently generating about -0.12 per unit of risk. If you would invest  2,680  in Transportadora de Gas on December 2, 2024 and sell it today you would lose (440.00) from holding Transportadora de Gas or give up 16.42% of portfolio value over 90 days.

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

Transportadora de Gas  vs.  Danaher

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

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

Danaher

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danaher has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Transportadora and Danaher

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

The idea behind Transportadora de Gas and Danaher 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.