Correlation Between Carmit and Accel Solutions

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

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

Diversification Opportunities for Carmit and Accel Solutions

0.62

Correlation Coefficient

Carmit  Accel Solutions

Poor diversification

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

Pair Corralation between Carmit and Accel Solutions

Assuming the 90 days trading horizon Carmit is expected to generate 1.23 times more return on investment than Accel Solutions. However, Carmit is 1.23 times more volatile than Accel Solutions Group. It trades about 0.01 of its potential returns per unit of risk. Accel Solutions Group is currently generating about -0.08 per unit of risk. If you would invest  119,900  in Carmit on September 26, 2024 and sell it today you would lose (800.00) from holding Carmit or give up 0.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Carmit  vs.  Accel Solutions Group

Carmit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carmit are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Carmit is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Accel Solutions Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Accel Solutions Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Accel Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carmit and Accel Solutions

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

The idea behind Carmit and Accel Solutions 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.