Correlation Between Varta AG and Carmat SA
Can any of the company-specific risk be diversified away by investing in both Varta AG and Carmat SA 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 Varta AG and Carmat SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and Carmat SA, you can compare the effects of market volatilities on Varta AG and Carmat SA 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 Varta AG with a short position of Carmat SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and Carmat SA.
Diversification Opportunities for Varta AG and Carmat SA
Very good diversification
The 3 months correlation between Varta and Carmat is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA and Varta 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 Varta AG are associated (or correlated) with Carmat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat SA has no effect on the direction of Varta AG i.e., Varta AG and Carmat SA go up and down completely randomly.
Pair Corralation between Varta AG and Carmat SA
Assuming the 90 days trading horizon Varta AG is expected to generate 1.41 times more return on investment than Carmat SA. However, Varta AG is 1.41 times more volatile than Carmat SA. It trades about 0.01 of its potential returns per unit of risk. Carmat SA is currently generating about -0.05 per unit of risk. If you would invest 1,503 in Varta AG on August 27, 2024 and sell it today you would lose (1,272) from holding Varta AG or give up 84.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varta AG vs. Carmat SA
Performance |
| Timeline |
| Varta AG |
| Carmat SA |
Varta AG and Carmat SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and Carmat SA
The main advantage of trading using opposite Varta AG and Carmat SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG position performs unexpectedly, Carmat SA 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 Carmat SA will offset losses from the drop in Carmat SA's long position.| Varta AG vs. ECHO INVESTMENT ZY | Varta AG vs. PennyMac Mortgage Investment | Varta AG vs. GALENA MINING LTD | Varta AG vs. MGIC INVESTMENT |
| Carmat SA vs. American Eagle Outfitters | Carmat SA vs. Computer And Technologies | Carmat SA vs. VARIOUS EATERIES LS | Carmat SA vs. FANDIFI TECHNOLOGY P |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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