Correlation Between Carbios and Poxel SA

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

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

Diversification Opportunities for Carbios and Poxel SA

0.83

Correlation Coefficient

Carbios  Poxel SA

Very poor diversification

The 3 months correlation between Carbios and Poxel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Carbios and Poxel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poxel 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 Poxel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poxel SA has no effect on the direction of Carbios i.e., Carbios and Poxel SA go up and down completely randomly.

Pair Corralation between Carbios and Poxel SA

Assuming the 90 days trading horizon Carbios is expected to generate 1.11 times more return on investment than Poxel SA. However, Carbios is 1.11 times more volatile than Poxel SA. It trades about -0.12 of its potential returns per unit of risk. Poxel SA is currently generating about -0.16 per unit of risk. If you would invest  2,150  in Carbios on September 29, 2024 and sell it today you would lose (1,450) from holding Carbios or give up 67.44% of portfolio value over 90 days.

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

Carbios  vs.  Poxel 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.

Poxel SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poxel SA 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 Poxel SA

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

The idea behind Carbios and Poxel 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.