Correlation Between Carmat SA and Mitie Group

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

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

Diversification Opportunities for Carmat SA and Mitie Group

0.49

Correlation Coefficient

Carmat SA  Mitie Group

Very weak diversification

The 3 months correlation between Carmat and Mitie is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and Mitie Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitie Group PLC 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 Mitie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitie Group PLC has no effect on the direction of Carmat SA i.e., Carmat SA and Mitie Group go up and down completely randomly.

Pair Corralation between Carmat SA and Mitie Group

Assuming the 90 days horizon Carmat SA is expected to under-perform the Mitie Group. In addition to that, Carmat SA is 4.86 times more volatile than Mitie Group PLC. It trades about -0.03 of its total potential returns per unit of risk. Mitie Group PLC is currently generating about 0.11 per unit of volatility. If you would invest  113,600  in Mitie Group PLC on September 23, 2024 and sell it today you would earn a total of  2,450  from holding Mitie Group PLC or generate 2.16% return on investment over 90 days.

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

Carmat SA  vs.  Mitie Group PLC

Carmat SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mitie Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitie Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mitie Group 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 Mitie Group

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

The idea behind Carmat SA and Mitie Group PLC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.