Correlation Between CGG SA and Natural Gas

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

By analyzing existing cross correlation between CGG SA ADR and Natural Gas Services, you can compare the effects of market volatilities on CGG SA and Natural Gas 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 CGG SA with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGG SA and Natural Gas.

Diversification Opportunities for CGG SA and Natural Gas

0.21

Correlation Coefficient

CGG SA  Natural Gas

Modest diversification

The 3 months correlation between CGG and Natural is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CGG SA ADR and Natural Gas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Services and CGG SA 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 CGG SA ADR are associated (or correlated) with Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Services has no effect on the direction of CGG SA i.e., CGG SA and Natural Gas go up and down completely randomly.

Pair Corralation between CGG SA and Natural Gas

If you would invest  1,955  in Natural Gas Services on September 13, 2024 and sell it today you would earn a total of  810.00  from holding Natural Gas Services or generate 41.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

CGG SA ADR  vs.  Natural Gas Services

CGG SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CGG SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CGG SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Natural Gas Services

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Natural Gas Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Natural Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CGG SA and Natural Gas

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

The idea behind CGG SA ADR and Natural Gas Services 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.