Correlation Between Transimex Transportation and South Basic

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

By analyzing existing cross correlation between Transimex Transportation JSC and South Basic Chemicals, you can compare the effects of market volatilities on Transimex Transportation and South Basic 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 Transimex Transportation with a short position of South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transimex Transportation and South Basic.

Diversification Opportunities for Transimex Transportation and South Basic

-0.71

Correlation Coefficient

Transimex Transportation  South Basic

Pay attention - limited upside

The 3 months correlation between Transimex and South is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Transimex Transportation JSC and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals and Transimex Transportation 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 Transimex Transportation JSC are associated (or correlated) with South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of Transimex Transportation i.e., Transimex Transportation and South Basic go up and down completely randomly.

Pair Corralation between Transimex Transportation and South Basic

Assuming the 90 days trading horizon Transimex Transportation JSC is expected to generate 1.39 times more return on investment than South Basic. However, Transimex Transportation is 1.39 times more volatile than South Basic Chemicals. It trades about 0.1 of its potential returns per unit of risk. South Basic Chemicals is currently generating about -0.13 per unit of risk. If you would invest  1,750,000  in Transimex Transportation JSC on December 30, 2024 and sell it today you would earn a total of  180,000  from holding Transimex Transportation JSC or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.67%
Values	Daily Returns

Transimex Transportation JSC  vs.  South Basic Chemicals

Transimex Transportation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transimex Transportation JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Transimex Transportation displayed solid returns over the last few months and may actually be approaching a breakup point.

South Basic Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days South Basic Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Transimex Transportation and South Basic

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

The idea behind Transimex Transportation JSC and South Basic Chemicals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.