Correlation Between Carmila SA and Burelle SA

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

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

Diversification Opportunities for Carmila SA and Burelle SA

0.82

Correlation Coefficient

Carmila SA  Burelle SA

Very poor diversification

The 3 months correlation between Carmila and Burelle is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Carmila SA and Burelle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burelle SA and Carmila SA 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 Carmila SA are associated (or correlated) with Burelle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burelle SA has no effect on the direction of Carmila SA i.e., Carmila SA and Burelle SA go up and down completely randomly.

Pair Corralation between Carmila SA and Burelle SA

Assuming the 90 days trading horizon Carmila SA is expected to generate 0.5 times more return on investment than Burelle SA. However, Carmila SA is 2.01 times less risky than Burelle SA. It trades about 0.13 of its potential returns per unit of risk. Burelle SA is currently generating about 0.04 per unit of risk. If you would invest  1,572  in Carmila SA on October 11, 2024 and sell it today you would earn a total of  34.00  from holding Carmila SA or generate 2.16% return on investment over 90 days.

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

Carmila SA  vs.  Burelle SA

Carmila SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carmila SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Burelle SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Carmila SA and Burelle SA

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

The idea behind Carmila SA and Burelle 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.