Correlation Between Carmat and SRP Groupe

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

By analyzing existing cross correlation between Carmat and SRP Groupe SA, you can compare the effects of market volatilities on Carmat and SRP Groupe 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 Carmat with a short position of SRP Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat and SRP Groupe.

Diversification Opportunities for Carmat and SRP Groupe

0.79

Correlation Coefficient

Carmat  SRP Groupe

Poor diversification

The 3 months correlation between Carmat and SRP is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Carmat and SRP Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SRP Groupe SA and Carmat 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 Carmat are associated (or correlated) with SRP Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SRP Groupe SA has no effect on the direction of Carmat i.e., Carmat and SRP Groupe go up and down completely randomly.

Pair Corralation between Carmat and SRP Groupe

Assuming the 90 days trading horizon Carmat is expected to generate 2.12 times more return on investment than SRP Groupe. However, Carmat is 2.12 times more volatile than SRP Groupe SA. It trades about -0.1 of its potential returns per unit of risk. SRP Groupe SA is currently generating about -0.21 per unit of risk. If you would invest  162.00  in Carmat on September 27, 2024 and sell it today you would lose (56.00) from holding Carmat or give up 34.57% of portfolio value over 90 days.

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

Carmat  vs.  SRP Groupe SA

Carmat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carmat has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

SRP Groupe SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SRP Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Carmat and SRP Groupe

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

The idea behind Carmat and SRP Groupe SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.