Correlation Between Transurban and Getlink SE

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

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

Diversification Opportunities for Transurban and Getlink SE

-0.35

Correlation Coefficient

Transurban  Getlink SE

Very good diversification

The 3 months correlation between Transurban and Getlink is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Transurban Group and Getlink SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getlink SE and Transurban 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 Transurban Group are associated (or correlated) with Getlink SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getlink SE has no effect on the direction of Transurban i.e., Transurban and Getlink SE go up and down completely randomly.

Pair Corralation between Transurban and Getlink SE

Assuming the 90 days horizon Transurban Group is expected to under-perform the Getlink SE. But the stock apears to be less risky and, when comparing its historical volatility, Transurban Group is 1.13 times less risky than Getlink SE. The stock trades about -0.06 of its potential returns per unit of risk. The Getlink SE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,528  in Getlink SE on December 30, 2024 and sell it today you would earn a total of  72.00  from holding Getlink SE or generate 4.71% return on investment over 90 days.

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

Transurban Group  vs.  Getlink SE

Transurban Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transurban is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Getlink SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Getlink SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Getlink SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Transurban and Getlink SE

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

The idea behind Transurban Group and Getlink SE 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.