Correlation Between Carnival Industrial and SanDi Properties

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

By analyzing existing cross correlation between Carnival Industrial Corp and SanDi Properties Co, you can compare the effects of market volatilities on Carnival Industrial and SanDi Properties 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 Carnival Industrial with a short position of SanDi Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Industrial and SanDi Properties.

Diversification Opportunities for Carnival Industrial and SanDi Properties

0.35

Correlation Coefficient

Carnival Industrial  SanDi Properties

Weak diversification

The 3 months correlation between Carnival and SanDi is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Industrial Corp and SanDi Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SanDi Properties and Carnival Industrial 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 Carnival Industrial Corp are associated (or correlated) with SanDi Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SanDi Properties has no effect on the direction of Carnival Industrial i.e., Carnival Industrial and SanDi Properties go up and down completely randomly.

Pair Corralation between Carnival Industrial and SanDi Properties

Assuming the 90 days trading horizon Carnival Industrial Corp is expected to under-perform the SanDi Properties. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Industrial Corp is 1.43 times less risky than SanDi Properties. The stock trades about -0.05 of its potential returns per unit of risk. The SanDi Properties Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,430  in SanDi Properties Co on December 2, 2024 and sell it today you would lose (70.00) from holding SanDi Properties Co or give up 1.29% of portfolio value over 90 days.

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

Carnival Industrial Corp  vs.  SanDi Properties Co

Carnival Industrial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Carnival Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SanDi Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days SanDi Properties Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SanDi Properties is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Carnival Industrial and SanDi Properties

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

The idea behind Carnival Industrial Corp and SanDi Properties Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.