Correlation Between National Beverage and Gaztransport

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

By analyzing existing cross correlation between National Beverage Corp and Gaztransport et Technigaz, you can compare the effects of market volatilities on National Beverage and Gaztransport 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 National Beverage with a short position of Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Gaztransport.

Diversification Opportunities for National Beverage and Gaztransport

0.65

Correlation Coefficient

National Beverage  Gaztransport

Poor diversification

The 3 months correlation between National and Gaztransport is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz and National Beverage 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 National Beverage Corp are associated (or correlated) with Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of National Beverage i.e., National Beverage and Gaztransport go up and down completely randomly.

Pair Corralation between National Beverage and Gaztransport

Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Gaztransport. In addition to that, National Beverage is 1.88 times more volatile than Gaztransport et Technigaz. It trades about -0.08 of its total potential returns per unit of risk. Gaztransport et Technigaz is currently generating about -0.12 per unit of volatility. If you would invest  13,455  in Gaztransport et Technigaz on September 18, 2024 and sell it today you would lose (350.00) from holding Gaztransport et Technigaz or give up 2.6% of portfolio value over 90 days.

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

National Beverage Corp  vs.  Gaztransport et Technigaz

National Beverage Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, National Beverage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gaztransport et Technigaz

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gaztransport is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Beverage and Gaztransport

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

The idea behind National Beverage Corp and Gaztransport et Technigaz 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.