Correlation Between Europlasma and Gaztransport Technigaz

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

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

Diversification Opportunities for Europlasma and Gaztransport Technigaz

-0.71

Correlation Coefficient

Europlasma  Gaztransport Technigaz

Pay attention - limited upside

The 3 months correlation between Europlasma and Gaztransport is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and Gaztransport Technigaz SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and Europlasma 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 Europlasma SA 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 Europlasma i.e., Europlasma and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between Europlasma and Gaztransport Technigaz

Assuming the 90 days trading horizon Europlasma SA is expected to generate 17.72 times more return on investment than Gaztransport Technigaz. However, Europlasma is 17.72 times more volatile than Gaztransport Technigaz SAS. It trades about 0.01 of its potential returns per unit of risk. Gaztransport Technigaz SAS is currently generating about 0.06 per unit of risk. If you would invest  13.00  in Europlasma SA on September 28, 2024 and sell it today you would lose (8.16) from holding Europlasma SA or give up 62.77% of portfolio value over 90 days.

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

Europlasma SA  vs.  Gaztransport Technigaz SAS

Europlasma SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europlasma SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Europlasma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gaztransport Technigaz

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gaztransport Technigaz is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europlasma and Gaztransport Technigaz

The main advantage of trading using opposite Europlasma and Gaztransport Technigaz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europlasma 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 Europlasma SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.