Correlation Between Carnival Industrial and SynCore Biotechnology

Can any of the company-specific risk be diversified away by investing in both Carnival Industrial and SynCore Biotechnology 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 SynCore Biotechnology 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 SynCore Biotechnology Co, you can compare the effects of market volatilities on Carnival Industrial and SynCore Biotechnology 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 SynCore Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Industrial and SynCore Biotechnology.

Diversification Opportunities for Carnival Industrial and SynCore Biotechnology

0.81

Correlation Coefficient

Carnival Industrial  SynCore Biotechnology

Very poor diversification

The 3 months correlation between Carnival and SynCore is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Industrial Corp and SynCore Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SynCore Biotechnology 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 SynCore Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SynCore Biotechnology has no effect on the direction of Carnival Industrial i.e., Carnival Industrial and SynCore Biotechnology go up and down completely randomly.

Pair Corralation between Carnival Industrial and SynCore Biotechnology

Assuming the 90 days trading horizon Carnival Industrial Corp is expected to under-perform the SynCore Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Industrial Corp is 13.69 times less risky than SynCore Biotechnology. The stock trades about -0.18 of its potential returns per unit of risk. The SynCore Biotechnology Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,485  in SynCore Biotechnology Co on September 29, 2024 and sell it today you would lose (25.00) from holding SynCore Biotechnology Co or give up 0.72% of portfolio value over 90 days.

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

Carnival Industrial Corp  vs.  SynCore Biotechnology Co

Carnival Industrial Corp

Risk-Adjusted Performance

0 of 100

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.

SynCore Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SynCore Biotechnology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Carnival Industrial and SynCore Biotechnology

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

The idea behind Carnival Industrial Corp and SynCore Biotechnology 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.