Correlation Between Gaztransport Technigaz and BELSHIPS SKIBS

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

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

Diversification Opportunities for Gaztransport Technigaz and BELSHIPS SKIBS

-0.53

Correlation Coefficient

Gaztransport Technigaz  BELSHIPS SKIBS

Excellent diversification

The 3 months correlation between Gaztransport and BELSHIPS is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and BELSHIPS SKIBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BELSHIPS SKIBS 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 SA are associated (or correlated) with BELSHIPS SKIBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BELSHIPS SKIBS has no effect on the direction of Gaztransport Technigaz i.e., Gaztransport Technigaz and BELSHIPS SKIBS go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and BELSHIPS SKIBS

Assuming the 90 days horizon Gaztransport Technigaz SA is expected to under-perform the BELSHIPS SKIBS. But the stock apears to be less risky and, when comparing its historical volatility, Gaztransport Technigaz SA is 6.31 times less risky than BELSHIPS SKIBS. The stock trades about 0.0 of its potential returns per unit of risk. The BELSHIPS SKIBS is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  151.00  in BELSHIPS SKIBS on March 5, 2024 and sell it today you would earn a total of  60.00  from holding BELSHIPS SKIBS or generate 39.74% return on investment over 90 days.

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

Gaztransport Technigaz SA  vs.  BELSHIPS SKIBS

Gaztransport Technigaz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaztransport Technigaz SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BELSHIPS SKIBS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BELSHIPS SKIBS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, BELSHIPS SKIBS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gaztransport Technigaz and BELSHIPS SKIBS

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

The idea behind Gaztransport Technigaz SA and BELSHIPS SKIBS 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.