Correlation Between Carbios and Gaztransport Technigaz

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

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

Diversification Opportunities for Carbios and Gaztransport Technigaz

-0.43

Correlation Coefficient

Carbios  Gaztransport Technigaz

Very good diversification

The 3 months correlation between Carbios and Gaztransport is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Carbios and Gaztransport Technigaz SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz 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 Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of Carbios i.e., Carbios and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between Carbios and Gaztransport Technigaz

Assuming the 90 days trading horizon Carbios is expected to generate 2.71 times more return on investment than Gaztransport Technigaz. However, Carbios is 2.71 times more volatile than Gaztransport Technigaz SAS. It trades about 0.04 of its potential returns per unit of risk. Gaztransport Technigaz SAS is currently generating about 0.08 per unit of risk. If you would invest  598.00  in Carbios on November 29, 2024 and sell it today you would earn a total of  0.00  from holding Carbios or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Carbios  vs.  Gaztransport Technigaz SAS

Carbios

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carbios are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Carbios reported solid returns over the last few months and may actually be approaching a breakup point.

Gaztransport Technigaz

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SAS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gaztransport Technigaz sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carbios and Gaztransport Technigaz

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

The idea behind Carbios and Gaztransport Technigaz 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.