Correlation Between Carbios and Afyren SAS

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

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

Diversification Opportunities for Carbios and Afyren SAS

0.74

Correlation Coefficient

Carbios  Afyren SAS

Poor diversification

The 3 months correlation between Carbios and Afyren is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Carbios and Afyren SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afyren SAS and Carbios 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 Carbios are associated (or correlated) with Afyren SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afyren SAS has no effect on the direction of Carbios i.e., Carbios and Afyren SAS go up and down completely randomly.

Pair Corralation between Carbios and Afyren SAS

Assuming the 90 days trading horizon Carbios is expected to under-perform the Afyren SAS. In addition to that, Carbios is 1.47 times more volatile than Afyren SAS. It trades about -0.37 of its total potential returns per unit of risk. Afyren SAS is currently generating about -0.14 per unit of volatility. If you would invest  293.00  in Afyren SAS on September 3, 2024 and sell it today you would lose (83.00) from holding Afyren SAS or give up 28.33% of portfolio value over 90 days.

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

Carbios  vs.  Afyren SAS

Carbios

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carbios 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.

Afyren SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afyren SAS 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.

Pair Trading with Carbios and Afyren SAS

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

The idea behind Carbios and Afyren SAS 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.