Correlation Between Carmat SA and ZTE
Can any of the company-specific risk be diversified away by investing in both Carmat SA and ZTE 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 ZTE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat SA and ZTE Corporation, you can compare the effects of market volatilities on Carmat SA and ZTE 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 ZTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat SA and ZTE.
Diversification Opportunities for Carmat SA and ZTE
Very good diversification
The 3 months correlation between Carmat and ZTE is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and ZTE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corporation 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 ZTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corporation has no effect on the direction of Carmat SA i.e., Carmat SA and ZTE go up and down completely randomly.
Pair Corralation between Carmat SA and ZTE
Assuming the 90 days horizon Carmat SA is expected to under-perform the ZTE. In addition to that, Carmat SA is 1.1 times more volatile than ZTE Corporation. It trades about -0.12 of its total potential returns per unit of risk. ZTE Corporation is currently generating about 0.15 per unit of volatility. If you would invest 176.00 in ZTE Corporation on November 2, 2024 and sell it today you would earn a total of 147.00 from holding ZTE Corporation or generate 83.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Carmat SA vs. ZTE Corp.
Performance |
| Timeline |
| Carmat SA |
| ZTE Corporation |
Carmat SA and ZTE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat SA and ZTE
The main advantage of trading using opposite Carmat SA and ZTE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA position performs unexpectedly, ZTE 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 ZTE will offset losses from the drop in ZTE's long position.| Carmat SA vs. ESSILORLUXOTTICA 12ON | Carmat SA vs. Becton Dickinson and | Carmat SA vs. HOYA Corporation | Carmat SA vs. Sartorius Stedim Biotech |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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