Correlation Between Transportadora and ALTRIA

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

Diversification Opportunities for Transportadora and ALTRIA

-0.46

Correlation Coefficient

Transportadora  ALTRIA

Very good diversification

The 3 months correlation between Transportadora and ALTRIA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and ALTRIA GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTRIA GROUP INC 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 ALTRIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTRIA GROUP INC has no effect on the direction of Transportadora i.e., Transportadora and ALTRIA go up and down completely randomly.

Pair Corralation between Transportadora and ALTRIA

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 2.96 times more return on investment than ALTRIA. However, Transportadora is 2.96 times more volatile than ALTRIA GROUP INC. It trades about 0.01 of its potential returns per unit of risk. ALTRIA GROUP INC is currently generating about 0.02 per unit of risk. If you would invest  2,897  in Transportadora de Gas on December 25, 2024 and sell it today you would lose (60.00) from holding Transportadora de Gas or give up 2.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Transportadora de Gas  vs.  ALTRIA GROUP INC

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.

ALTRIA GROUP INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALTRIA GROUP INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ALTRIA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Transportadora and ALTRIA

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

The idea behind Transportadora de Gas and ALTRIA GROUP INC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.