Correlation Between Inapa Inv and Galp Energia
Can any of the company-specific risk be diversified away by investing in both Inapa Inv and Galp Energia 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 Inapa Inv and Galp Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inapa Inv and Galp Energia SGPS, you can compare the effects of market volatilities on Inapa Inv and Galp Energia 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 Inapa Inv with a short position of Galp Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inapa Inv and Galp Energia.
Diversification Opportunities for Inapa Inv and Galp Energia
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inapa and Galp is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Inapa Inv and Galp Energia SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galp Energia SGPS and Inapa Inv 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 Inapa Inv are associated (or correlated) with Galp Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galp Energia SGPS has no effect on the direction of Inapa Inv i.e., Inapa Inv and Galp Energia go up and down completely randomly.
Pair Corralation between Inapa Inv and Galp Energia
Assuming the 90 days trading horizon Inapa Inv is expected to generate 10.74 times less return on investment than Galp Energia. But when comparing it to its historical volatility, Inapa Inv is 2.41 times less risky than Galp Energia. It trades about 0.07 of its potential returns per unit of risk. Galp Energia SGPS is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,518 in Galp Energia SGPS on January 26, 2024 and sell it today you would earn a total of 481.00 from holding Galp Energia SGPS or generate 31.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Inapa Inv vs. Galp Energia SGPS
Performance |
Timeline |
Inapa Inv |
Galp Energia SGPS |
Inapa Inv and Galp Energia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Inapa Inv and Galp Energia
The main advantage of trading using opposite Inapa Inv and Galp Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inapa Inv position performs unexpectedly, Galp Energia 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 Galp Energia will offset losses from the drop in Galp Energia's long position.Inapa Inv vs. Mota Engil SGPS SA | Inapa Inv vs. Martifer SGPS SA | Inapa Inv vs. Impresa Sociedade | Inapa Inv vs. Sonae SGPS SA |
Galp Energia vs. EDP Energias | Galp Energia vs. Sonae SGPS SA | Galp Energia vs. Banco Comercial Portugues | Galp Energia vs. NOS SGPS SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |