Correlation Between Carrefour and Glob Bioenergi

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

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

Diversification Opportunities for Carrefour and Glob Bioenergi

0.57

Correlation Coefficient

Carrefour  Glob Bioenergi

Very weak diversification

The 3 months correlation between Carrefour and Glob is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and Glob Bioenergi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glob Bioenergi 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 Glob Bioenergi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glob Bioenergi has no effect on the direction of Carrefour i.e., Carrefour and Glob Bioenergi go up and down completely randomly.

Pair Corralation between Carrefour and Glob Bioenergi

Assuming the 90 days horizon Carrefour SA is expected to under-perform the Glob Bioenergi. But the stock apears to be less risky and, when comparing its historical volatility, Carrefour SA is 2.61 times less risky than Glob Bioenergi. The stock trades about -0.24 of its potential returns per unit of risk. The Glob Bioenergi is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Glob Bioenergi on October 7, 2024 and sell it today you would earn a total of  8.00  from holding Glob Bioenergi or generate 10.0% return on investment over 90 days.

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

Carrefour SA  vs.  Glob Bioenergi

Carrefour SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Glob Bioenergi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glob Bioenergi has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Glob Bioenergi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Carrefour and Glob Bioenergi

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

The idea behind Carrefour SA and Glob Bioenergi 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.