Correlation Between Transportadora and Cablevision Holding

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

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

Diversification Opportunities for Transportadora and Cablevision Holding

0.93

Correlation Coefficient

Transportadora  Cablevision Holding

Almost no diversification

The 3 months correlation between Transportadora and Cablevision is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Cablevision Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cablevision Holding and Transportadora 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 Transportadora de Gas are associated (or correlated) with Cablevision Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cablevision Holding has no effect on the direction of Transportadora i.e., Transportadora and Cablevision Holding go up and down completely randomly.

Pair Corralation between Transportadora and Cablevision Holding

Assuming the 90 days trading horizon Transportadora is expected to generate 1.44 times less return on investment than Cablevision Holding. In addition to that, Transportadora is 1.14 times more volatile than Cablevision Holding SA. It trades about 0.14 of its total potential returns per unit of risk. Cablevision Holding SA is currently generating about 0.23 per unit of volatility. If you would invest  527,000  in Cablevision Holding SA on September 16, 2024 and sell it today you would earn a total of  187,000  from holding Cablevision Holding SA or generate 35.48% return on investment over 90 days.

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

Transportadora de Gas  vs.  Cablevision Holding SA

Transportadora de Gas

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Transportadora sustained solid returns over the last few months and may actually be approaching a breakup point.

Cablevision Holding

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cablevision Holding SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Cablevision Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and Cablevision Holding

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

The idea behind Transportadora de Gas and Cablevision Holding 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.