Correlation Between WPLAU and Transportadora

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

By analyzing existing cross correlation between WPLAU 37 15 MAR 28 and Transportadora de Gas, you can compare the effects of market volatilities on WPLAU 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 WPLAU with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPLAU and Transportadora.

Diversification Opportunities for WPLAU and Transportadora

0.79

Correlation Coefficient

WPLAU  Transportadora

Poor diversification

The 3 months correlation between WPLAU and Transportadora is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding WPLAU 37 15 MAR 28 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 WPLAU 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 WPLAU 37 15 MAR 28 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 WPLAU i.e., WPLAU and Transportadora go up and down completely randomly.

Pair Corralation between WPLAU and Transportadora

Assuming the 90 days trading horizon WPLAU 37 15 MAR 28 is expected to under-perform the Transportadora. But the bond apears to be less risky and, when comparing its historical volatility, WPLAU 37 15 MAR 28 is 6.43 times less risky than Transportadora. The bond trades about -0.01 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,023  in Transportadora de Gas on October 10, 2024 and sell it today you would earn a total of  2,302  from holding Transportadora de Gas or generate 225.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	13.54%
Values	Daily Returns

WPLAU 37 15 MAR 28  vs.  Transportadora de Gas

WPLAU 37 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WPLAU 37 15 MAR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for WPLAU 37 15 MAR 28 investors.

Transportadora de Gas

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WPLAU and Transportadora

The main advantage of trading using opposite WPLAU and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPLAU 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 WPLAU 37 15 MAR 28 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.