Correlation Between Carmat SA and New China
Can any of the company-specific risk be diversified away by investing in both Carmat SA and New China 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 New China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat SA and New China Life, you can compare the effects of market volatilities on Carmat SA and New China 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 New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat SA and New China.
Diversification Opportunities for Carmat SA and New China
Pay attention - limited upside
The 3 months correlation between Carmat and New is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life 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 New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of Carmat SA i.e., Carmat SA and New China go up and down completely randomly.
Pair Corralation between Carmat SA and New China
Assuming the 90 days horizon Carmat SA is expected to under-perform the New China. But the stock apears to be less risky and, when comparing its historical volatility, Carmat SA is 1.35 times less risky than New China. The stock trades about -0.37 of its potential returns per unit of risk. The New China Life is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 256.00 in New China Life on August 27, 2024 and sell it today you would earn a total of 20.00 from holding New China Life or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carmat SA vs. New China Life
Performance |
| Timeline |
| Carmat SA |
| New China Life |
Carmat SA and New China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat SA and New China
The main advantage of trading using opposite Carmat SA and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.| Carmat SA vs. American Eagle Outfitters | Carmat SA vs. Computer And Technologies | Carmat SA vs. VARIOUS EATERIES LS | Carmat SA vs. FANDIFI TECHNOLOGY P |
| New China vs. Meiko Electronics Co | New China vs. Renesas Electronics | New China vs. Arrow Electronics | New China vs. Applied Materials |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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