Correlation Between Carpenter Technology and Remy Cointreau

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

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

Diversification Opportunities for Carpenter Technology and Remy Cointreau

-0.44

Correlation Coefficient

Carpenter Technology  Remy Cointreau

Very good diversification

The 3 months correlation between Carpenter and Remy is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Remy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remy Cointreau SA and Carpenter Technology 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 Carpenter Technology are associated (or correlated) with Remy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remy Cointreau SA has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Remy Cointreau go up and down completely randomly.

Pair Corralation between Carpenter Technology and Remy Cointreau

Considering the 90-day investment horizon Carpenter Technology is expected to generate 1.08 times more return on investment than Remy Cointreau. However, Carpenter Technology is 1.08 times more volatile than Remy Cointreau SA. It trades about 0.05 of its potential returns per unit of risk. Remy Cointreau SA is currently generating about -0.09 per unit of risk. If you would invest  19,420  in Carpenter Technology on December 4, 2024 and sell it today you would earn a total of  1,231  from holding Carpenter Technology or generate 6.34% return on investment over 90 days.

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

Carpenter Technology  vs.  Remy Cointreau SA

Carpenter Technology

Risk-Adjusted Performance

Modest

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

Remy Cointreau SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Remy Cointreau SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly 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 Carpenter Technology and Remy Cointreau

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

The idea behind Carpenter Technology and Remy Cointreau 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.