Correlation Between Gaztransport Technigaz and Elior SCA

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

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

Diversification Opportunities for Gaztransport Technigaz and Elior SCA

-0.06

Correlation Coefficient

Gaztransport Technigaz  Elior SCA

Good diversification

The 3 months correlation between Gaztransport and Elior is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SAS and Elior SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elior SCA 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 SAS are associated (or correlated) with Elior SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elior SCA has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and Elior SCA go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Elior SCA

Assuming the 90 days trading horizon Gaztransport Technigaz SAS is expected to generate 0.29 times more return on investment than Elior SCA. However, Gaztransport Technigaz SAS is 3.42 times less risky than Elior SCA. It trades about 0.09 of its potential returns per unit of risk. Elior SCA is currently generating about -0.05 per unit of risk. If you would invest  12,860  in Gaztransport Technigaz SAS on September 3, 2024 and sell it today you would earn a total of  910.00  from holding Gaztransport Technigaz SAS or generate 7.08% return on investment over 90 days.

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

Gaztransport Technigaz SAS  vs.  Elior SCA

Gaztransport Technigaz

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 7 (%) 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.

Elior SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elior SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Gaztransport Technigaz and Elior SCA

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

The idea behind Gaztransport Technigaz SAS and Elior SCA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.