Correlation Between Carbios and Sims Metal
Can any of the company-specific risk be diversified away by investing in both Carbios and Sims Metal 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 Carbios and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carbios and Sims Metal Management, you can compare the effects of market volatilities on Carbios and Sims Metal 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 Carbios with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carbios and Sims Metal.
Diversification Opportunities for Carbios and Sims Metal
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Carbios and Sims is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Carbios and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management and Carbios 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 Carbios are associated (or correlated) with Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of Carbios i.e., Carbios and Sims Metal go up and down completely randomly.
Pair Corralation between Carbios and Sims Metal
Assuming the 90 days horizon Carbios is expected to generate 4.7 times more return on investment than Sims Metal. However, Carbios is 4.7 times more volatile than Sims Metal Management. It trades about 0.02 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.01 per unit of risk. If you would invest 882.00 in Carbios on September 14, 2024 and sell it today you would lose (33.00) from holding Carbios or give up 3.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carbios vs. Sims Metal Management
Performance |
| Timeline |
| Carbios |
| Sims Metal Management |
Carbios and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carbios and Sims Metal
The main advantage of trading using opposite Carbios and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carbios position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| Carbios vs. Geely Automobile Holdings | Carbios vs. National Beverage Corp | Carbios vs. Motorcar Parts of | Carbios vs. Lery Seafood Group |
| Sims Metal vs. ArcelorMittal | Sims Metal vs. NIPPON STEEL SPADR | Sims Metal vs. Reliance Steel Aluminum | Sims Metal vs. Superior Plus Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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