Correlation Between Zegona Communications and Gaztransport

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

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

Diversification Opportunities for Zegona Communications and Gaztransport

-0.53

Correlation Coefficient

Zegona Communications  Gaztransport

Excellent diversification

The 3 months correlation between Zegona and Gaztransport is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Zegona Communications i.e., Zegona Communications and Gaztransport go up and down completely randomly.

Pair Corralation between Zegona Communications and Gaztransport

Assuming the 90 days trading horizon Zegona Communications is expected to generate 2.56 times less return on investment than Gaztransport. In addition to that, Zegona Communications is 1.64 times more volatile than Gaztransport et Technigaz. It trades about 0.02 of its total potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.08 per unit of volatility. If you would invest  12,615  in Gaztransport et Technigaz on September 4, 2024 and sell it today you would earn a total of  830.00  from holding Gaztransport et Technigaz or generate 6.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Zegona Communications Plc  vs.  Gaztransport et Technigaz

Zegona Communications Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zegona Communications Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Zegona Communications is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gaztransport et Technigaz

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gaztransport may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zegona Communications and Gaztransport

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

The idea behind Zegona Communications Plc and Gaztransport et Technigaz 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.