Correlation Between Ecolab and Carbios
Can any of the company-specific risk be diversified away by investing in both Ecolab and Carbios 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 Ecolab and Carbios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Carbios, you can compare the effects of market volatilities on Ecolab and Carbios 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 Ecolab with a short position of Carbios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Carbios.
Diversification Opportunities for Ecolab and Carbios
Excellent diversification
The 3 months correlation between Ecolab and Carbios is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios and Ecolab 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 Ecolab Inc are associated (or correlated) with Carbios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios has no effect on the direction of Ecolab i.e., Ecolab and Carbios go up and down completely randomly.
Pair Corralation between Ecolab and Carbios
Assuming the 90 days horizon Ecolab Inc is expected to generate 0.35 times more return on investment than Carbios. However, Ecolab Inc is 2.88 times less risky than Carbios. It trades about 0.09 of its potential returns per unit of risk. Carbios is currently generating about -0.06 per unit of risk. If you would invest 13,371 in Ecolab Inc on September 13, 2024 and sell it today you would earn a total of 10,129 from holding Ecolab Inc or generate 75.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ecolab Inc vs. Carbios
Performance |
| Timeline |
| Ecolab Inc |
| Carbios |
Ecolab and Carbios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Carbios
The main advantage of trading using opposite Ecolab and Carbios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Carbios 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 Carbios will offset losses from the drop in Carbios' long position.| Ecolab vs. Albemarle | Ecolab vs. Superior Plus Corp | Ecolab vs. SIVERS SEMICONDUCTORS AB | Ecolab vs. Norsk Hydro ASA |
| Carbios vs. Geely Automobile Holdings | Carbios vs. National Beverage Corp | Carbios vs. Motorcar Parts of | Carbios vs. Lery Seafood Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |