Correlation Between Transportadora and KINDER

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

Diversification Opportunities for Transportadora and KINDER

-0.15

Correlation Coefficient

Transportadora  KINDER

Good diversification

The 3 months correlation between Transportadora and KINDER is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and KINDER MORGAN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN INC has no effect on the direction of Transportadora i.e., Transportadora and KINDER go up and down completely randomly.

Pair Corralation between Transportadora and KINDER

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 1.66 times more return on investment than KINDER. However, Transportadora is 1.66 times more volatile than KINDER MORGAN INC. It trades about 0.29 of its potential returns per unit of risk. KINDER MORGAN INC is currently generating about 0.01 per unit of risk. If you would invest  2,073  in Transportadora de Gas on October 10, 2024 and sell it today you would earn a total of  1,252  from holding Transportadora de Gas or generate 60.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Transportadora de Gas  vs.  KINDER MORGAN INC

Transportadora de Gas

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 23 (%) 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.

KINDER MORGAN INC

Risk-Adjusted Performance

1 of 100

Very Weak

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

Pair Trading with Transportadora and KINDER

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

The idea behind Transportadora de Gas and KINDER MORGAN 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.