Correlation Between Transportadora and Sable Offshore

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

Diversification Opportunities for Transportadora and Sable Offshore

0.39

Correlation Coefficient

Transportadora  Sable Offshore

Weak diversification

The 3 months correlation between Transportadora and Sable is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp 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 Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Transportadora i.e., Transportadora and Sable Offshore go up and down completely randomly.

Pair Corralation between Transportadora and Sable Offshore

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 0.62 times more return on investment than Sable Offshore. However, Transportadora de Gas is 1.62 times less risky than Sable Offshore. It trades about 0.15 of its potential returns per unit of risk. Sable Offshore Corp is currently generating about 0.07 per unit of risk. If you would invest  3,012  in Transportadora de Gas on October 12, 2024 and sell it today you would earn a total of  265.00  from holding Transportadora de Gas or generate 8.8% return on investment over 90 days.

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

Transportadora de Gas  vs.  Sable Offshore Corp

Transportadora de Gas

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 20 (%) 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.

Sable Offshore Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and Sable Offshore

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

The idea behind Transportadora de Gas and Sable Offshore Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.