Correlation Between Transportadora and NESNVX

Can any of the company-specific risk be diversified away by investing in both Transportadora and NESNVX 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 NESNVX 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 NESNVX 4125 01 OCT 27, you can compare the effects of market volatilities on Transportadora and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and NESNVX.

Diversification Opportunities for Transportadora and NESNVX

0.42

Correlation Coefficient

Transportadora  NESNVX

Very weak diversification

The 3 months correlation between Transportadora and NESNVX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and NESNVX 4125 01 OCT 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 4125 01 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 4125 01 has no effect on the direction of Transportadora i.e., Transportadora and NESNVX go up and down completely randomly.

Pair Corralation between Transportadora and NESNVX

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 11.07 times more return on investment than NESNVX. However, Transportadora is 11.07 times more volatile than NESNVX 4125 01 OCT 27. It trades about 0.27 of its potential returns per unit of risk. NESNVX 4125 01 OCT 27 is currently generating about -0.39 per unit of risk. If you would invest  1,931  in Transportadora de Gas on October 3, 2024 and sell it today you would earn a total of  996.00  from holding Transportadora de Gas or generate 51.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	37.1%
Values	Daily Returns

Transportadora de Gas  vs.  NESNVX 4125 01 OCT 27

Transportadora de Gas

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 21 (%) 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.

NESNVX 4125 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 4125 01 OCT 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Transportadora and NESNVX

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

The idea behind Transportadora de Gas and NESNVX 4125 01 OCT 27 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.