Correlation Between Carmat and Txcom SA

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

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

Diversification Opportunities for Carmat and Txcom SA

-0.51

Correlation Coefficient

Carmat  Txcom SA

Excellent diversification

The 3 months correlation between Carmat and Txcom is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Carmat and Txcom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Txcom SA and Carmat 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 Carmat are associated (or correlated) with Txcom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Txcom SA has no effect on the direction of Carmat i.e., Carmat and Txcom SA go up and down completely randomly.

Pair Corralation between Carmat and Txcom SA

Assuming the 90 days trading horizon Carmat is expected to under-perform the Txcom SA. In addition to that, Carmat is 3.09 times more volatile than Txcom SA. It trades about -0.13 of its total potential returns per unit of risk. Txcom SA is currently generating about 0.03 per unit of volatility. If you would invest  840.00  in Txcom SA on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Txcom SA or generate 2.38% return on investment over 90 days.

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

Carmat  vs.  Txcom SA

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.

Txcom SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Txcom SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Txcom SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Carmat and Txcom SA

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

The idea behind Carmat and Txcom SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.