Correlation Between Carmat and DBV Technologies

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

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

Diversification Opportunities for Carmat and DBV Technologies

0.55

Correlation Coefficient

Carmat  DBV Technologies

Very weak diversification

The 3 months correlation between Carmat and DBV is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Carmat and DBV Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBV Technologies 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 DBV Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBV Technologies has no effect on the direction of Carmat i.e., Carmat and DBV Technologies go up and down completely randomly.

Pair Corralation between Carmat and DBV Technologies

Assuming the 90 days trading horizon Carmat is expected to under-perform the DBV Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Carmat is 1.67 times less risky than DBV Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The DBV Technologies SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  53.00  in DBV Technologies SA on September 24, 2024 and sell it today you would earn a total of  6.00  from holding DBV Technologies SA or generate 11.32% return on investment over 90 days.

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

Carmat  vs.  DBV Technologies 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.

DBV Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DBV Technologies SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DBV Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carmat and DBV Technologies

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

The idea behind Carmat and DBV Technologies 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.