Correlation Between Transocean and Cruzeiro

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

By analyzing existing cross correlation between Transocean and Cruzeiro do Sul, you can compare the effects of market volatilities on Transocean and Cruzeiro 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 Transocean with a short position of Cruzeiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transocean and Cruzeiro.

Diversification Opportunities for Transocean and Cruzeiro

0.64

Correlation Coefficient

Transocean  Cruzeiro

Poor diversification

The 3 months correlation between Transocean and Cruzeiro is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and Cruzeiro do Sul in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cruzeiro do Sul and Transocean 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 Transocean are associated (or correlated) with Cruzeiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cruzeiro do Sul has no effect on the direction of Transocean i.e., Transocean and Cruzeiro go up and down completely randomly.

Pair Corralation between Transocean and Cruzeiro

Assuming the 90 days trading horizon Transocean is expected to generate 1.1 times less return on investment than Cruzeiro. In addition to that, Transocean is 1.58 times more volatile than Cruzeiro do Sul. It trades about 0.1 of its total potential returns per unit of risk. Cruzeiro do Sul is currently generating about 0.17 per unit of volatility. If you would invest  382.00  in Cruzeiro do Sul on April 24, 2025 and sell it today you would earn a total of  100.00  from holding Cruzeiro do Sul or generate 26.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Transocean  vs.  Cruzeiro do Sul

Transocean

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transocean are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Transocean sustained solid returns over the last few months and may actually be approaching a breakup point.

Cruzeiro do Sul

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cruzeiro do Sul are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cruzeiro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transocean and Cruzeiro

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

The idea behind Transocean and Cruzeiro do Sul 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.