Correlation Between Carmat SA and ACCOR SPADR

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

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

Diversification Opportunities for Carmat SA and ACCOR SPADR

0.05

Correlation Coefficient

Carmat SA  ACCOR SPADR

Significant diversification

The 3 months correlation between Carmat and ACCOR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and ACCOR SPADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCOR SPADR NEW and Carmat 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 Carmat SA are associated (or correlated) with ACCOR SPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCOR SPADR NEW has no effect on the direction of Carmat SA i.e., Carmat SA and ACCOR SPADR go up and down completely randomly.

Pair Corralation between Carmat SA and ACCOR SPADR

Assuming the 90 days horizon Carmat SA is expected to under-perform the ACCOR SPADR. In addition to that, Carmat SA is 3.48 times more volatile than ACCOR SPADR NEW. It trades about -0.03 of its total potential returns per unit of risk. ACCOR SPADR NEW is currently generating about -0.04 per unit of volatility. If you would invest  920.00  in ACCOR SPADR NEW on December 29, 2024 and sell it today you would lose (40.00) from holding ACCOR SPADR NEW or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Carmat SA  vs.  ACCOR SPADR NEW

Carmat SA

Risk-Adjusted Performance

Very Weak

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

ACCOR SPADR NEW

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACCOR SPADR NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ACCOR SPADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carmat SA and ACCOR SPADR

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

The idea behind Carmat SA and ACCOR SPADR NEW 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.