Correlation Between Carmat SA and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Carmat SA and CNH Industrial 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 SA and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat SA and CNH Industrial NV, you can compare the effects of market volatilities on Carmat SA and CNH Industrial 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 SA with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat SA and CNH Industrial.
Diversification Opportunities for Carmat SA and CNH Industrial
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carmat and CNH is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and Carmat SA 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 SA are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Carmat SA i.e., Carmat SA and CNH Industrial go up and down completely randomly.
Pair Corralation between Carmat SA and CNH Industrial
Assuming the 90 days horizon Carmat SA is expected to under-perform the CNH Industrial. In addition to that, Carmat SA is 3.42 times more volatile than CNH Industrial NV. It trades about -0.04 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.02 per unit of volatility. If you would invest 1,173 in CNH Industrial NV on November 27, 2024 and sell it today you would earn a total of 84.00 from holding CNH Industrial NV or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Carmat SA vs. CNH Industrial NV
Performance |
| Timeline |
| Carmat SA |
| CNH Industrial NV |
Carmat SA and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat SA and CNH Industrial
The main advantage of trading using opposite Carmat SA and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Carmat SA vs. GungHo Online Entertainment | Carmat SA vs. Prosiebensat 1 Media | Carmat SA vs. CNVISION MEDIA | Carmat SA vs. REMEDY ENTERTAINMENT OYJ |
| CNH Industrial vs. GOLD ROAD RES | CNH Industrial vs. MICRONIC MYDATA | CNH Industrial vs. DATAGROUP SE | CNH Industrial vs. CN DATANG C |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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