Correlation Between Carrier Global and ZENERGY B

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

By analyzing existing cross correlation between Carrier Global and ZENERGY B AB, you can compare the effects of market volatilities on Carrier Global and ZENERGY B 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 Carrier Global with a short position of ZENERGY B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and ZENERGY B.

Diversification Opportunities for Carrier Global and ZENERGY B

0.19

Correlation Coefficient

Carrier Global  ZENERGY B

Average diversification

The 3 months correlation between Carrier and ZENERGY is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global and ZENERGY B AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZENERGY B AB and Carrier Global 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 Carrier Global are associated (or correlated) with ZENERGY B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZENERGY B AB has no effect on the direction of Carrier Global i.e., Carrier Global and ZENERGY B go up and down completely randomly.

Pair Corralation between Carrier Global and ZENERGY B

Assuming the 90 days horizon Carrier Global is expected to generate 0.79 times more return on investment than ZENERGY B. However, Carrier Global is 1.27 times less risky than ZENERGY B. It trades about 0.02 of its potential returns per unit of risk. ZENERGY B AB is currently generating about -0.07 per unit of risk. If you would invest  6,896  in Carrier Global on September 16, 2024 and sell it today you would earn a total of  90.00  from holding Carrier Global or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Carrier Global  vs.  ZENERGY B AB

Carrier Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carrier Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Carrier Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ZENERGY B AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZENERGY B AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Carrier Global and ZENERGY B

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

The idea behind Carrier Global and ZENERGY B AB 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.