Correlation Between 50247VAB5 and Transportadora

Can any of the company-specific risk be diversified away by investing in both 50247VAB5 and Transportadora 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 50247VAB5 and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LYB INTL FIN and Transportadora de Gas, you can compare the effects of market volatilities on 50247VAB5 and Transportadora 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 50247VAB5 with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of 50247VAB5 and Transportadora.

Diversification Opportunities for 50247VAB5 and Transportadora

-0.08

Correlation Coefficient

50247VAB5  Transportadora

Good diversification

The 3 months correlation between 50247VAB5 and Transportadora is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding LYB INTL FIN and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and 50247VAB5 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 LYB INTL FIN are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of 50247VAB5 i.e., 50247VAB5 and Transportadora go up and down completely randomly.

Pair Corralation between 50247VAB5 and Transportadora

Assuming the 90 days trading horizon LYB INTL FIN is expected to generate 0.27 times more return on investment than Transportadora. However, LYB INTL FIN is 3.68 times less risky than Transportadora. It trades about 0.0 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.01 per unit of risk. If you would invest  9,120  in LYB INTL FIN on December 28, 2024 and sell it today you would lose (15.00) from holding LYB INTL FIN or give up 0.16% of portfolio value over 90 days.

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

LYB INTL FIN  vs.  Transportadora de Gas

LYB INTL FIN

Risk-Adjusted Performance

Very Weak

Over the last 90 days LYB INTL FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50247VAB5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transportadora de Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Transportadora is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with 50247VAB5 and Transportadora

The main advantage of trading using opposite 50247VAB5 and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 50247VAB5 position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.

The idea behind LYB INTL FIN and Transportadora de Gas 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.