Correlation Between Carmat SA and China Communications
Can any of the company-specific risk be diversified away by investing in both Carmat SA and China Communications 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 China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat SA and China Communications Services, you can compare the effects of market volatilities on Carmat SA and China Communications 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 China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat SA and China Communications.
Diversification Opportunities for Carmat SA and China Communications
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carmat and China is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications 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 China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Carmat SA i.e., Carmat SA and China Communications go up and down completely randomly.
Pair Corralation between Carmat SA and China Communications
Assuming the 90 days horizon Carmat SA is expected to under-perform the China Communications. In addition to that, Carmat SA is 3.35 times more volatile than China Communications Services. It trades about -0.22 of its total potential returns per unit of risk. China Communications Services is currently generating about 0.01 per unit of volatility. If you would invest 48.00 in China Communications Services on September 2, 2024 and sell it today you would earn a total of 0.00 from holding China Communications Services or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carmat SA vs. China Communications Services
Performance |
| Timeline |
| Carmat SA |
| China Communications |
Carmat SA and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat SA and China Communications
The main advantage of trading using opposite Carmat SA and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| Carmat SA vs. ESSILORLUXOTTICA 12ON | Carmat SA vs. Intuitive Surgical | Carmat SA vs. EssilorLuxottica Socit anonyme |
| China Communications vs. Deutsche Telekom AG | China Communications vs. Superior Plus Corp | China Communications vs. NMI Holdings | China Communications vs. Origin Agritech |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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