Correlation Between Ramsay Gnrale and Carpenter Technology

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

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

Diversification Opportunities for Ramsay Gnrale and Carpenter Technology

-0.69

Correlation Coefficient

Ramsay Gnrale  Carpenter Technology

Excellent diversification

The 3 months correlation between Ramsay and Carpenter is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Gnrale de and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology and Ramsay Gnrale 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 Ramsay Gnrale de are associated (or correlated) with Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of Ramsay Gnrale i.e., Ramsay Gnrale and Carpenter Technology go up and down completely randomly.

Pair Corralation between Ramsay Gnrale and Carpenter Technology

Assuming the 90 days horizon Ramsay Gnrale de is expected to under-perform the Carpenter Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ramsay Gnrale de is 1.35 times less risky than Carpenter Technology. The stock trades about -0.19 of its potential returns per unit of risk. The Carpenter Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  14,181  in Carpenter Technology on September 25, 2024 and sell it today you would earn a total of  1,919  from holding Carpenter Technology or generate 13.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Ramsay Gnrale de  vs.  Carpenter Technology

Ramsay Gnrale de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ramsay Gnrale de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Carpenter Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carpenter Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Carpenter Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ramsay Gnrale and Carpenter Technology

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

The idea behind Ramsay Gnrale de and Carpenter Technology 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.