Correlation Between Transportadora and Roadzen

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

Diversification Opportunities for Transportadora and Roadzen

0.28

Correlation Coefficient

Transportadora  Roadzen

Modest diversification

The 3 months correlation between Transportadora and Roadzen is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Roadzen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roadzen 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 Roadzen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roadzen has no effect on the direction of Transportadora i.e., Transportadora and Roadzen go up and down completely randomly.

Pair Corralation between Transportadora and Roadzen

Considering the 90-day investment horizon Transportadora is expected to generate 6.7 times less return on investment than Roadzen. But when comparing it to its historical volatility, Transportadora de Gas is 6.72 times less risky than Roadzen. It trades about 0.08 of its potential returns per unit of risk. Roadzen is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Roadzen on October 11, 2024 and sell it today you would lose (2.75) from holding Roadzen or give up 22.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	44.44%
Values	Daily Returns

Transportadora de Gas  vs.  Roadzen

Transportadora de Gas

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Roadzen

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roadzen are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Roadzen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and Roadzen

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

The idea behind Transportadora de Gas and Roadzen 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.