Correlation Between Broadpeak and Carmat

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

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

Diversification Opportunities for Broadpeak and Carmat

0.62

Correlation Coefficient

Broadpeak  Carmat

Poor diversification

The 3 months correlation between Broadpeak and Carmat is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Broadpeak SA and Carmat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat and Broadpeak 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 Broadpeak SA are associated (or correlated) with Carmat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat has no effect on the direction of Broadpeak i.e., Broadpeak and Carmat go up and down completely randomly.

Pair Corralation between Broadpeak and Carmat

Assuming the 90 days trading horizon Broadpeak SA is expected to generate 0.56 times more return on investment than Carmat. However, Broadpeak SA is 1.79 times less risky than Carmat. It trades about -0.22 of its potential returns per unit of risk. Carmat is currently generating about -0.13 per unit of risk. If you would invest  150.00  in Broadpeak SA on September 24, 2024 and sell it today you would lose (54.00) from holding Broadpeak SA or give up 36.0% of portfolio value over 90 days.

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

Broadpeak SA  vs.  Carmat

Broadpeak SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Carmat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carmat has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Broadpeak and Carmat

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

The idea behind Broadpeak SA and Carmat 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.