Correlation Between Carmat and Patrimoine
Can any of the company-specific risk be diversified away by investing in both Carmat and Patrimoine 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 Carmat and Patrimoine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat and Patrimoine et Commerce, you can compare the effects of market volatilities on Carmat and Patrimoine 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 Carmat with a short position of Patrimoine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat and Patrimoine.
Diversification Opportunities for Carmat and Patrimoine
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carmat and Patrimoine is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Carmat and Patrimoine et Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patrimoine et Commerce and Carmat 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 Carmat are associated (or correlated) with Patrimoine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patrimoine et Commerce has no effect on the direction of Carmat i.e., Carmat and Patrimoine go up and down completely randomly.
Pair Corralation between Carmat and Patrimoine
Assuming the 90 days trading horizon Carmat is expected to under-perform the Patrimoine. In addition to that, Carmat is 3.15 times more volatile than Patrimoine et Commerce. It trades about -0.12 of its total potential returns per unit of risk. Patrimoine et Commerce is currently generating about -0.02 per unit of volatility. If you would invest 2,141 in Patrimoine et Commerce on August 30, 2024 and sell it today you would lose (131.00) from holding Patrimoine et Commerce or give up 6.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carmat vs. Patrimoine et Commerce
Performance |
| Timeline |
| Carmat |
| Patrimoine et Commerce |
Carmat and Patrimoine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat and Patrimoine
The main advantage of trading using opposite Carmat and Patrimoine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat position performs unexpectedly, Patrimoine 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 Patrimoine will offset losses from the drop in Patrimoine's long position.The idea behind Carmat and Patrimoine et Commerce 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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