Correlation Between Getlink SE and Txcom SA

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

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

Diversification Opportunities for Getlink SE and Txcom SA

-0.43

Correlation Coefficient

Getlink SE  Txcom SA

Very good diversification

The 3 months correlation between Getlink and Txcom is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Getlink SE and Txcom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Txcom SA and Getlink SE 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 Getlink SE are associated (or correlated) with Txcom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Txcom SA has no effect on the direction of Getlink SE i.e., Getlink SE and Txcom SA go up and down completely randomly.

Pair Corralation between Getlink SE and Txcom SA

Assuming the 90 days trading horizon Getlink SE is expected to under-perform the Txcom SA. But the stock apears to be less risky and, when comparing its historical volatility, Getlink SE is 1.65 times less risky than Txcom SA. The stock trades about -0.09 of its potential returns per unit of risk. The Txcom SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  840.00  in Txcom SA on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Txcom SA or generate 2.38% return on investment over 90 days.

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

Getlink SE  vs.  Txcom SA

Getlink SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Txcom SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Txcom SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Txcom SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Getlink SE and Txcom SA

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

The idea behind Getlink SE and Txcom SA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.