Correlation Between Carbios and Maat Pharma

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

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

Diversification Opportunities for Carbios and Maat Pharma

-0.55

Correlation Coefficient

Carbios  Maat Pharma

Excellent diversification

The 3 months correlation between Carbios and Maat is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Carbios and Maat Pharma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maat Pharma SA 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 Maat Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maat Pharma SA has no effect on the direction of Carbios i.e., Carbios and Maat Pharma go up and down completely randomly.

Pair Corralation between Carbios and Maat Pharma

Assuming the 90 days trading horizon Carbios is expected to under-perform the Maat Pharma. In addition to that, Carbios is 3.05 times more volatile than Maat Pharma SA. It trades about -0.12 of its total potential returns per unit of risk. Maat Pharma SA is currently generating about 0.04 per unit of volatility. If you would invest  740.00  in Maat Pharma SA on September 29, 2024 and sell it today you would earn a total of  58.00  from holding Maat Pharma SA or generate 7.84% 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.  Maat Pharma SA

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.

Maat Pharma SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maat Pharma SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maat Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Carbios and Maat Pharma

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

The idea behind Carbios and Maat Pharma 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.