Correlation Between Carmila SA and Cnova NV

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

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

Diversification Opportunities for Carmila SA and Cnova NV

-0.41

Correlation Coefficient

Carmila SA  Cnova NV

Very good diversification

The 3 months correlation between Carmila and Cnova is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Carmila SA and Cnova NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cnova NV 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 Cnova NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cnova NV has no effect on the direction of Carmila SA i.e., Carmila SA and Cnova NV go up and down completely randomly.

Pair Corralation between Carmila SA and Cnova NV

Assuming the 90 days trading horizon Carmila SA is expected to generate 0.12 times more return on investment than Cnova NV. However, Carmila SA is 8.09 times less risky than Cnova NV. It trades about 0.15 of its potential returns per unit of risk. Cnova NV is currently generating about -0.03 per unit of risk. If you would invest  1,578  in Carmila SA on December 23, 2024 and sell it today you would earn a total of  142.00  from holding Carmila SA or generate 9.0% return on investment over 90 days.

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

Carmila SA  vs.  Cnova NV

Carmila SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carmila SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carmila SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cnova NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cnova NV 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Carmila SA and Cnova NV

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

The idea behind Carmila SA and Cnova NV 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.