Correlation Between Carmila SA and Icade SA

Can any of the company-specific risk be diversified away by investing in both Carmila SA and Icade 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 Icade 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 Icade SA, you can compare the effects of market volatilities on Carmila SA and Icade 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 Icade SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmila SA and Icade SA.

Diversification Opportunities for Carmila SA and Icade SA

0.15

Correlation Coefficient

Carmila SA  Icade SA

Average diversification

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

Pair Corralation between Carmila SA and Icade SA

Assuming the 90 days trading horizon Carmila SA is expected to generate 0.44 times more return on investment than Icade SA. However, Carmila SA is 2.25 times less risky than Icade SA. It trades about 0.17 of its potential returns per unit of risk. Icade SA is currently generating about 0.06 per unit of risk. If you would invest  1,596  in Carmila SA on December 30, 2024 and sell it today you would earn a total of  172.00  from holding Carmila SA or generate 10.78% return on investment over 90 days.

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

Carmila SA  vs.  Icade SA

Carmila SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carmila SA are ranked lower than 13 (%) 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.

Icade SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icade SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Icade SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Carmila SA and Icade SA

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

The idea behind Carmila SA and Icade 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 Transaction History module to view history of all your transactions and understand their impact on performance.