Correlation Between Carrefour and Atari SA

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

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

Diversification Opportunities for Carrefour and Atari SA

-0.15

Correlation Coefficient

Carrefour  Atari SA

Good diversification

The 3 months correlation between Carrefour and Atari is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and Atari SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atari SA and Carrefour 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 Carrefour SA are associated (or correlated) with Atari SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atari SA has no effect on the direction of Carrefour i.e., Carrefour and Atari SA go up and down completely randomly.

Pair Corralation between Carrefour and Atari SA

Assuming the 90 days horizon Carrefour SA is expected to under-perform the Atari SA. But the stock apears to be less risky and, when comparing its historical volatility, Carrefour SA is 2.79 times less risky than Atari SA. The stock trades about -0.03 of its potential returns per unit of risk. The Atari SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Atari SA on December 2, 2024 and sell it today you would lose (1.00) from holding Atari SA or give up 7.14% of portfolio value over 90 days.

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

Carrefour SA  vs.  Atari SA

Carrefour SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Carrefour is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Atari SA

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Carrefour and Atari SA

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

The idea behind Carrefour SA and Atari 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 Stocks Directory module to find actively traded stocks across global markets.