Correlation Between Trematon Capital and Transpaco

Can any of the company-specific risk be diversified away by investing in both Trematon Capital and Transpaco 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 Trematon Capital and Transpaco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trematon Capital Investments and Transpaco, you can compare the effects of market volatilities on Trematon Capital and Transpaco 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 Trematon Capital with a short position of Transpaco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trematon Capital and Transpaco.

Diversification Opportunities for Trematon Capital and Transpaco

0.08

Correlation Coefficient

Trematon Capital  Transpaco

Significant diversification

The 3 months correlation between Trematon and Transpaco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and Transpaco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transpaco and Trematon Capital 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 Trematon Capital Investments are associated (or correlated) with Transpaco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transpaco has no effect on the direction of Trematon Capital i.e., Trematon Capital and Transpaco go up and down completely randomly.

Pair Corralation between Trematon Capital and Transpaco

Assuming the 90 days trading horizon Trematon Capital is expected to generate 1.04 times less return on investment than Transpaco. In addition to that, Trematon Capital is 1.36 times more volatile than Transpaco. It trades about 0.02 of its total potential returns per unit of risk. Transpaco is currently generating about 0.03 per unit of volatility. If you would invest  301,600  in Transpaco on September 30, 2024 and sell it today you would earn a total of  68,400  from holding Transpaco or generate 22.68% return on investment over 90 days.

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

Trematon Capital Investments  vs.  Transpaco

Trematon Capital Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trematon Capital Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trematon Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Transpaco

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transpaco are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Transpaco is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Trematon Capital and Transpaco

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

The idea behind Trematon Capital Investments and Transpaco 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.