Correlation Between Transportadora and Ledesma SAAI

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

Diversification Opportunities for Transportadora and Ledesma SAAI

0.9

Correlation Coefficient

Transportadora  Ledesma SAAI

Almost no diversification

The 3 months correlation between Transportadora and Ledesma is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Ledesma SAAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledesma SAAI 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 Ledesma SAAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledesma SAAI has no effect on the direction of Transportadora i.e., Transportadora and Ledesma SAAI go up and down completely randomly.

Pair Corralation between Transportadora and Ledesma SAAI

Assuming the 90 days trading horizon Transportadora de Gas is expected to under-perform the Ledesma SAAI. In addition to that, Transportadora is 2.05 times more volatile than Ledesma SAAI. It trades about -0.02 of its total potential returns per unit of risk. Ledesma SAAI is currently generating about 0.15 per unit of volatility. If you would invest  150,000  in Ledesma SAAI on October 27, 2024 and sell it today you would earn a total of  8,500  from holding Ledesma SAAI or generate 5.67% return on investment over 90 days.

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

Transportadora de Gas  vs.  Ledesma SAAI

Transportadora de Gas

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Transportadora sustained solid returns over the last few months and may actually be approaching a breakup point.

Ledesma SAAI

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ledesma SAAI are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ledesma SAAI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and Ledesma SAAI

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

The idea behind Transportadora de Gas and Ledesma SAAI 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 Commodity Directory module to find actively traded commodities issued by global exchanges.