Correlation Between TronicS Microsystems and Carbios

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

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

Diversification Opportunities for TronicS Microsystems and Carbios

0.0

Correlation Coefficient

TronicS Microsystems  Carbios

Pay attention - limited upside

The 3 months correlation between TronicS and Carbios is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TronicS Microsystems SA and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios and TronicS Microsystems 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 TronicS Microsystems SA are associated (or correlated) with Carbios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios has no effect on the direction of TronicS Microsystems i.e., TronicS Microsystems and Carbios go up and down completely randomly.

Pair Corralation between TronicS Microsystems and Carbios

Assuming the 90 days trading horizon TronicS Microsystems SA is expected to generate 2.04 times more return on investment than Carbios. However, TronicS Microsystems is 2.04 times more volatile than Carbios. It trades about 0.06 of its potential returns per unit of risk. Carbios is currently generating about 0.04 per unit of risk. If you would invest  400.00  in TronicS Microsystems SA on November 29, 2024 and sell it today you would lose (32.00) from holding TronicS Microsystems SA or give up 8.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TronicS Microsystems SA  vs.  Carbios

TronicS Microsystems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TronicS Microsystems SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, TronicS Microsystems reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with TronicS Microsystems and Carbios

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

The idea behind TronicS Microsystems SA and Carbios 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 CEOs Directory module to screen CEOs from public companies around the world.