Correlation Between Transportadora and STRA Hannoversche

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

Diversification Opportunities for Transportadora and STRA Hannoversche

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Transportadora and STRA is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and STRA Hannoversche Verkehrsbetr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRA Hannoversche 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 STRA Hannoversche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRA Hannoversche has no effect on the direction of Transportadora i.e., Transportadora and STRA Hannoversche go up and down completely randomly.

Pair Corralation between Transportadora and STRA Hannoversche

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 0.91 times more return on investment than STRA Hannoversche. However, Transportadora de Gas is 1.1 times less risky than STRA Hannoversche. It trades about 0.11 of its potential returns per unit of risk. STRA Hannoversche Verkehrsbetriebe is currently generating about -0.02 per unit of risk. If you would invest  1,680  in Transportadora de Gas on September 23, 2024 and sell it today you would earn a total of  960.00  from holding Transportadora de Gas or generate 57.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Transportadora de Gas  vs.  STRA Hannoversche Verkehrsbetr

 Performance 
       Timeline  
Transportadora de Gas 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
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.
STRA Hannoversche 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STRA Hannoversche Verkehrsbetriebe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, STRA Hannoversche is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Transportadora and STRA Hannoversche Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Transportadora and STRA Hannoversche

The main advantage of trading using opposite Transportadora and STRA Hannoversche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, STRA Hannoversche 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 STRA Hannoversche will offset losses from the drop in STRA Hannoversche's long position.
The idea behind Transportadora de Gas and STRA Hannoversche Verkehrsbetriebe 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 CEOs Directory module to screen CEOs from public companies around the world.

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