Correlation Between Transportadora and Grimoldi

Can any of the company-specific risk be diversified away by investing in both Transportadora and Grimoldi 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 Grimoldi 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 Grimoldi SA, you can compare the effects of market volatilities on Transportadora and Grimoldi 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 Grimoldi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Grimoldi.

Diversification Opportunities for Transportadora and Grimoldi

0.35

Correlation Coefficient

Transportadora  Grimoldi

Weak diversification

The 3 months correlation between Transportadora and Grimoldi is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Grimoldi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grimoldi SA 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 Grimoldi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grimoldi SA has no effect on the direction of Transportadora i.e., Transportadora and Grimoldi go up and down completely randomly.

Pair Corralation between Transportadora and Grimoldi

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.01 times more return on investment than Grimoldi. However, Transportadora is 1.01 times more volatile than Grimoldi SA. It trades about 0.14 of its potential returns per unit of risk. Grimoldi SA is currently generating about 0.05 per unit of risk. If you would invest  530,000  in Transportadora de Gas on September 15, 2024 and sell it today you would earn a total of  119,000  from holding Transportadora de Gas or generate 22.45% return on investment over 90 days.

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

Transportadora de Gas  vs.  Grimoldi 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.

Grimoldi SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grimoldi SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grimoldi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Transportadora and Grimoldi

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

The idea behind Transportadora de Gas and Grimoldi 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.