Correlation Between Galp Energa and Transportadora
Can any of the company-specific risk be diversified away by investing in both Galp Energa and Transportadora 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 Galp Energa and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galp Energa and Transportadora de Gas, you can compare the effects of market volatilities on Galp Energa and Transportadora 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 Galp Energa with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galp Energa and Transportadora.
Diversification Opportunities for Galp Energa and Transportadora
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Galp and Transportadora is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Galp Energa and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and Galp Energa 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 Galp Energa are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Galp Energa i.e., Galp Energa and Transportadora go up and down completely randomly.
Pair Corralation between Galp Energa and Transportadora
Assuming the 90 days horizon Galp Energa is expected to generate 3.42 times less return on investment than Transportadora. But when comparing it to its historical volatility, Galp Energa is 1.65 times less risky than Transportadora. It trades about 0.03 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,534 in Transportadora de Gas on March 25, 2025 and sell it today you would earn a total of 1,140 from holding Transportadora de Gas or generate 74.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.68% |
| Values | Daily Returns |
Galp Energa vs. Transportadora de Gas
Performance |
| Timeline |
| Galp Energa |
| Transportadora de Gas |
Galp Energa and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galp Energa and Transportadora
The main advantage of trading using opposite Galp Energa and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galp Energa position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Galp Energa vs. Shell PLC ADR | Galp Energa vs. Equinor ASA ADR | Galp Energa vs. BP PLC ADR | Galp Energa vs. Eni SpA ADR |
| Transportadora vs. Petroleo Brasileiro Petrobras | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Petrleo Brasileiro SA | Transportadora vs. Equinor ASA ADR |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |