Correlation Between Transportadora and Fenbo Holdings

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

Diversification Opportunities for Transportadora and Fenbo Holdings

0.86

Correlation Coefficient

Transportadora  Fenbo Holdings

Very poor diversification

The 3 months correlation between Transportadora and Fenbo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings 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 Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Transportadora i.e., Transportadora and Fenbo Holdings go up and down completely randomly.

Pair Corralation between Transportadora and Fenbo Holdings

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 0.61 times more return on investment than Fenbo Holdings. However, Transportadora de Gas is 1.65 times less risky than Fenbo Holdings. It trades about -0.02 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about -0.05 per unit of risk. If you would invest  2,957  in Transportadora de Gas on December 30, 2024 and sell it today you would lose (230.00) from holding Transportadora de Gas or give up 7.78% of portfolio value over 90 days.

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

Transportadora de Gas  vs.  Fenbo Holdings Limited

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. In spite of comparatively stable technical and fundamental indicators, Transportadora is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Fenbo Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fenbo Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Transportadora and Fenbo Holdings

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

The idea behind Transportadora de Gas and Fenbo Holdings Limited 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.