Correlation Between Transportadora and TAKIX

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

Diversification Opportunities for Transportadora and TAKIX

-0.12

Correlation Coefficient

Transportadora  TAKIX

Good diversification

The 3 months correlation between Transportadora and TAKIX is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and TAKIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAKIX 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 TAKIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAKIX has no effect on the direction of Transportadora i.e., Transportadora and TAKIX go up and down completely randomly.

Pair Corralation between Transportadora and TAKIX

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 11.68 times more return on investment than TAKIX. However, Transportadora is 11.68 times more volatile than TAKIX. It trades about 0.01 of its potential returns per unit of risk. TAKIX is currently generating about 0.06 per unit of risk. If you would invest  2,822  in Transportadora de Gas on December 22, 2024 and sell it today you would lose (66.00) from holding Transportadora de Gas or give up 2.34% of portfolio value over 90 days.

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

Transportadora de Gas  vs.  TAKIX

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.

TAKIX

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TAKIX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, TAKIX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Transportadora and TAKIX

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

The idea behind Transportadora de Gas and TAKIX 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .