Correlation Between Gaztransport and Neometals

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

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

Diversification Opportunities for Gaztransport and Neometals

-0.34

Correlation Coefficient

Gaztransport  Neometals

Very good diversification

The 3 months correlation between Gaztransport and Neometals is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals and Gaztransport 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 Gaztransport et Technigaz are associated (or correlated) with Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Gaztransport i.e., Gaztransport and Neometals go up and down completely randomly.

Pair Corralation between Gaztransport and Neometals

Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to generate 0.34 times more return on investment than Neometals. However, Gaztransport et Technigaz is 2.93 times less risky than Neometals. It trades about -0.1 of its potential returns per unit of risk. Neometals is currently generating about -0.14 per unit of risk. If you would invest  13,514  in Gaztransport et Technigaz on September 16, 2024 and sell it today you would lose (339.00) from holding Gaztransport et Technigaz or give up 2.51% of portfolio value over 90 days.

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

Gaztransport et Technigaz  vs.  Neometals

Gaztransport et Technigaz

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gaztransport is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Neometals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gaztransport and Neometals

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

The idea behind Gaztransport et Technigaz and Neometals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.