Correlation Between Diagnostic Medical and Gaztransport Technigaz

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

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

Diversification Opportunities for Diagnostic Medical and Gaztransport Technigaz

-0.56

Correlation Coefficient

Diagnostic Medical  Gaztransport Technigaz

Excellent diversification

The 3 months correlation between Diagnostic and Gaztransport is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Diagnostic Medical Systems and Gaztransport Technigaz SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and Diagnostic Medical 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 Diagnostic Medical Systems 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 Diagnostic Medical i.e., Diagnostic Medical and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between Diagnostic Medical and Gaztransport Technigaz

Assuming the 90 days trading horizon Diagnostic Medical Systems is expected to under-perform the Gaztransport Technigaz. In addition to that, Diagnostic Medical is 2.98 times more volatile than Gaztransport Technigaz SAS. It trades about -0.1 of its total potential returns per unit of risk. Gaztransport Technigaz SAS is currently generating about 0.08 per unit of volatility. If you would invest  12,535  in Gaztransport Technigaz SAS on September 14, 2024 and sell it today you would earn a total of  805.00  from holding Gaztransport Technigaz SAS or generate 6.42% return on investment over 90 days.

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

Diagnostic Medical Systems  vs.  Gaztransport Technigaz SAS

Diagnostic Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diagnostic Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Gaztransport Technigaz

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Diagnostic Medical and Gaztransport Technigaz

The main advantage of trading using opposite Diagnostic Medical and Gaztransport Technigaz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diagnostic Medical 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 Diagnostic Medical Systems and Gaztransport Technigaz SAS 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.