Correlation Between Gaztransport Technigaz and KAUFMAN ET

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

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

Diversification Opportunities for Gaztransport Technigaz and KAUFMAN ET

-0.12

Correlation Coefficient

Gaztransport Technigaz  KAUFMAN ET

Good diversification

The 3 months correlation between Gaztransport and KAUFMAN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and KAUFMAN ET BROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAUFMAN ET BROAD and Gaztransport Technigaz 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 Technigaz SA are associated (or correlated) with KAUFMAN ET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAUFMAN ET BROAD has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and KAUFMAN ET go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and KAUFMAN ET

Assuming the 90 days horizon Gaztransport Technigaz is expected to generate 1.51 times less return on investment than KAUFMAN ET. But when comparing it to its historical volatility, Gaztransport Technigaz SA is 1.05 times less risky than KAUFMAN ET. It trades about 0.02 of its potential returns per unit of risk. KAUFMAN ET BROAD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,120  in KAUFMAN ET BROAD on September 25, 2024 and sell it today you would earn a total of  65.00  from holding KAUFMAN ET BROAD or generate 2.08% return on investment over 90 days.

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

Gaztransport Technigaz SA  vs.  KAUFMAN ET BROAD

Gaztransport Technigaz

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

KAUFMAN ET BROAD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KAUFMAN ET BROAD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, KAUFMAN ET is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gaztransport Technigaz and KAUFMAN ET

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

The idea behind Gaztransport Technigaz SA and KAUFMAN ET BROAD 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.