Correlation Between Transportadora and THORNEY TECHS

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

Diversification Opportunities for Transportadora and THORNEY TECHS

-0.04

Correlation Coefficient

Transportadora  THORNEY TECHS

Good diversification

The 3 months correlation between Transportadora and THORNEY is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of Transportadora i.e., Transportadora and THORNEY TECHS go up and down completely randomly.

Pair Corralation between Transportadora and THORNEY TECHS

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 0.74 times more return on investment than THORNEY TECHS. However, Transportadora de Gas is 1.36 times less risky than THORNEY TECHS. It trades about 0.1 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.04 per unit of risk. If you would invest  1,710  in Transportadora de Gas on September 24, 2024 and sell it today you would earn a total of  930.00  from holding Transportadora de Gas or generate 54.39% return on investment over 90 days.

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

Transportadora de Gas  vs.  THORNEY TECHS LTD

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.

THORNEY TECHS LTD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in THORNEY TECHS LTD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, THORNEY TECHS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Transportadora and THORNEY TECHS

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

The idea behind Transportadora de Gas and THORNEY TECHS LTD 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.