Correlation Between Sika AG and Carbios SAS
Can any of the company-specific risk be diversified away by investing in both Sika AG and Carbios SAS 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 Sika AG and Carbios SAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG and Carbios SAS, you can compare the effects of market volatilities on Sika AG and Carbios SAS 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 Sika AG with a short position of Carbios SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Carbios SAS.
Diversification Opportunities for Sika AG and Carbios SAS
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sika and Carbios is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG and Carbios SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios SAS and Sika AG 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 Sika AG are associated (or correlated) with Carbios SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios SAS has no effect on the direction of Sika AG i.e., Sika AG and Carbios SAS go up and down completely randomly.
Pair Corralation between Sika AG and Carbios SAS
Assuming the 90 days horizon Sika AG is expected to under-perform the Carbios SAS. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sika AG is 2.52 times less risky than Carbios SAS. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Carbios SAS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 837.00 in Carbios SAS on September 15, 2024 and sell it today you would earn a total of 94.00 from holding Carbios SAS or generate 11.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sika AG vs. Carbios SAS
Performance |
| Timeline |
| Sika AG |
| Carbios SAS |
Sika AG and Carbios SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and Carbios SAS
The main advantage of trading using opposite Sika AG and Carbios SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG position performs unexpectedly, Carbios SAS 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 SAS will offset losses from the drop in Carbios SAS's long position.| Sika AG vs. Chemours Co | Sika AG vs. International Flavors Fragrances | Sika AG vs. Air Products and | Sika AG vs. PPG Industries |
| Carbios SAS vs. Chemours Co | Carbios SAS vs. International Flavors Fragrances | Carbios SAS vs. Air Products and | Carbios SAS vs. PPG Industries |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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