Correlation Between Carbios SAS and International Flavors
Can any of the company-specific risk be diversified away by investing in both Carbios SAS and International Flavors 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 SAS and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carbios SAS and International Flavors Fragrances, you can compare the effects of market volatilities on Carbios SAS and International Flavors 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 SAS with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carbios SAS and International Flavors.
Diversification Opportunities for Carbios SAS and International Flavors
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carbios and International is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Carbios SAS and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and Carbios SAS 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 SAS are associated (or correlated) with International Flavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Flavors has no effect on the direction of Carbios SAS i.e., Carbios SAS and International Flavors go up and down completely randomly.
Pair Corralation between Carbios SAS and International Flavors
Assuming the 90 days horizon Carbios SAS is expected to generate 8.63 times more return on investment than International Flavors. However, Carbios SAS is 8.63 times more volatile than International Flavors Fragrances. It trades about 0.12 of its potential returns per unit of risk. International Flavors Fragrances is currently generating about 0.09 per unit of risk. If you would invest 835.00 in Carbios SAS on September 16, 2024 and sell it today you would earn a total of 125.00 from holding Carbios SAS or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carbios SAS vs. International Flavors Fragranc
Performance |
| Timeline |
| Carbios SAS |
| International Flavors |
Carbios SAS and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carbios SAS and International Flavors
The main advantage of trading using opposite Carbios SAS and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carbios SAS position performs unexpectedly, International Flavors 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 International Flavors will offset losses from the drop in International Flavors' long position.| Carbios SAS vs. Chemours Co | Carbios SAS vs. International Flavors Fragrances | Carbios SAS vs. Air Products and | Carbios SAS vs. PPG Industries |
| International Flavors vs. LyondellBasell Industries NV | International Flavors vs. Cabot | International Flavors vs. Westlake Chemical | International Flavors vs. Air Products and |
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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