Correlation Between Transimex Transportation and Construction JSC

Can any of the company-specific risk be diversified away by investing in both Transimex Transportation and Construction JSC 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 Construction JSC 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 Construction JSC No5, you can compare the effects of market volatilities on Transimex Transportation and Construction JSC 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 Construction JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transimex Transportation and Construction JSC.

Diversification Opportunities for Transimex Transportation and Construction JSC

-0.46

Correlation Coefficient

Transimex Transportation  Construction JSC

Very good diversification

The 3 months correlation between Transimex and Construction is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Transimex Transportation JSC and Construction JSC No5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction JSC No5 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 Construction JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction JSC No5 has no effect on the direction of Transimex Transportation i.e., Transimex Transportation and Construction JSC go up and down completely randomly.

Pair Corralation between Transimex Transportation and Construction JSC

Assuming the 90 days trading horizon Transimex Transportation JSC is expected to under-perform the Construction JSC. But the stock apears to be less risky and, when comparing its historical volatility, Transimex Transportation JSC is 1.8 times less risky than Construction JSC. The stock trades about -0.03 of its potential returns per unit of risk. The Construction JSC No5 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,700,000  in Construction JSC No5 on September 12, 2024 and sell it today you would earn a total of  300,000  from holding Construction JSC No5 or generate 17.65% return on investment over 90 days.

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

Transimex Transportation JSC  vs.  Construction JSC No5

Transimex Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transimex Transportation JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Transimex Transportation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Construction JSC No5

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Construction JSC No5 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction JSC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transimex Transportation and Construction JSC

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

The idea behind Transimex Transportation JSC and Construction JSC No5 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .