Correlation Between United States and Gaztransport Technigaz

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

By analyzing existing cross correlation between United States Steel and Gaztransport Technigaz SA, you can compare the effects of market volatilities on United States and Gaztransport Technigaz 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 United States with a short position of Gaztransport Technigaz. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Gaztransport Technigaz.

Diversification Opportunities for United States and Gaztransport Technigaz

0.6

Correlation Coefficient

United States  Gaztransport Technigaz

Poor diversification

The 3 months correlation between United and Gaztransport is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and United States 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 United States Steel are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of United States i.e., United States and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between United States and Gaztransport Technigaz

Assuming the 90 days trading horizon United States Steel is expected to under-perform the Gaztransport Technigaz. In addition to that, United States is 1.79 times more volatile than Gaztransport Technigaz SA. It trades about -0.22 of its total potential returns per unit of risk. Gaztransport Technigaz SA is currently generating about -0.1 per unit of volatility. If you would invest  13,532  in Gaztransport Technigaz SA on September 20, 2024 and sell it today you would lose (532.00) from holding Gaztransport Technigaz SA or give up 3.93% of portfolio value over 90 days.

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

United States Steel  vs.  Gaztransport Technigaz SA

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Gaztransport Technigaz

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaztransport Technigaz is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United States and Gaztransport Technigaz

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

The idea behind United States Steel and Gaztransport Technigaz SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.