Correlation Between Carmat SA and Sparta AG
Can any of the company-specific risk be diversified away by investing in both Carmat SA and Sparta AG 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 Sparta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat SA and Sparta AG, you can compare the effects of market volatilities on Carmat SA and Sparta AG 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 Sparta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat SA and Sparta AG.
Diversification Opportunities for Carmat SA and Sparta AG
Excellent diversification
The 3 months correlation between Carmat and Sparta is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and Sparta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta AG 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 Sparta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta AG has no effect on the direction of Carmat SA i.e., Carmat SA and Sparta AG go up and down completely randomly.
Pair Corralation between Carmat SA and Sparta AG
Assuming the 90 days horizon Carmat SA is expected to under-perform the Sparta AG. In addition to that, Carmat SA is 2.77 times more volatile than Sparta AG. It trades about -0.05 of its total potential returns per unit of risk. Sparta AG is currently generating about 0.0 per unit of volatility. If you would invest 3,500 in Sparta AG on August 27, 2024 and sell it today you would lose (260.00) from holding Sparta AG or give up 7.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carmat SA vs. Sparta AG
Performance |
| Timeline |
| Carmat SA |
| Sparta AG |
Carmat SA and Sparta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat SA and Sparta AG
The main advantage of trading using opposite Carmat SA and Sparta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA position performs unexpectedly, Sparta AG 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 Sparta AG will offset losses from the drop in Sparta AG'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 |
| Sparta AG vs. GALENA MINING LTD | Sparta AG vs. PUBLIC STORAGE PRFO | Sparta AG vs. SOFI TECHNOLOGIES | Sparta AG vs. INFORMATION SVC GRP |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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