Correlation Between Carnival Industrial and Excellence Optoelectronic

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

Diversification Opportunities for Carnival Industrial and Excellence Optoelectronic

-0.59

Correlation Coefficient

Carnival Industrial  Excellence Optoelectronic

Excellent diversification

The 3 months correlation between Carnival and Excellence is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Industrial Corp and Excellence Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellence Optoelectronic 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 Excellence Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellence Optoelectronic has no effect on the direction of Carnival Industrial i.e., Carnival Industrial and Excellence Optoelectronic go up and down completely randomly.

Pair Corralation between Carnival Industrial and Excellence Optoelectronic

Assuming the 90 days trading horizon Carnival Industrial Corp is expected to under-perform the Excellence Optoelectronic. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Industrial Corp is 5.12 times less risky than Excellence Optoelectronic. The stock trades about -0.14 of its potential returns per unit of risk. The Excellence Optoelectronic is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,575  in Excellence Optoelectronic on September 14, 2024 and sell it today you would earn a total of  255.00  from holding Excellence Optoelectronic or generate 9.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Carnival Industrial Corp  vs.  Excellence Optoelectronic

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.

Excellence Optoelectronic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Excellence Optoelectronic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Excellence Optoelectronic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnival Industrial and Excellence Optoelectronic

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

The idea behind Carnival Industrial Corp and Excellence Optoelectronic 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.