Correlation Between Carrier Global and FLAT GLASS

Can any of the company-specific risk be diversified away by investing in both Carrier Global and FLAT GLASS 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 Carrier Global and FLAT GLASS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carrier Global and FLAT GLASS GROUP, you can compare the effects of market volatilities on Carrier Global and FLAT GLASS 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 Carrier Global with a short position of FLAT GLASS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and FLAT GLASS.

Diversification Opportunities for Carrier Global and FLAT GLASS

-0.35

Correlation Coefficient

Carrier Global  FLAT GLASS

Very good diversification

The 3 months correlation between Carrier and FLAT is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global and FLAT GLASS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLAT GLASS GROUP and Carrier Global 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 Carrier Global are associated (or correlated) with FLAT GLASS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLAT GLASS GROUP has no effect on the direction of Carrier Global i.e., Carrier Global and FLAT GLASS go up and down completely randomly.

Pair Corralation between Carrier Global and FLAT GLASS

Assuming the 90 days horizon Carrier Global is expected to generate 0.56 times more return on investment than FLAT GLASS. However, Carrier Global is 1.78 times less risky than FLAT GLASS. It trades about -0.2 of its potential returns per unit of risk. FLAT GLASS GROUP is currently generating about -0.13 per unit of risk. If you would invest  7,025  in Carrier Global on September 22, 2024 and sell it today you would lose (620.00) from holding Carrier Global or give up 8.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Carrier Global  vs.  FLAT GLASS GROUP

Carrier Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrier Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

FLAT GLASS GROUP

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FLAT GLASS GROUP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FLAT GLASS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carrier Global and FLAT GLASS

The main advantage of trading using opposite Carrier Global and FLAT GLASS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, FLAT GLASS 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 FLAT GLASS will offset losses from the drop in FLAT GLASS's long position.

The idea behind Carrier Global and FLAT GLASS GROUP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.