Correlation Between DATA MODUL and Carmat SA

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

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

Diversification Opportunities for DATA MODUL and Carmat SA

0.12

Correlation Coefficient

DATA MODUL  Carmat SA

Average diversification

The 3 months correlation between DATA and Carmat is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA and DATA MODUL 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 DATA MODUL are associated (or correlated) with Carmat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat SA has no effect on the direction of DATA MODUL i.e., DATA MODUL and Carmat SA go up and down completely randomly.

Pair Corralation between DATA MODUL and Carmat SA

Assuming the 90 days trading horizon DATA MODUL is expected to generate 0.43 times more return on investment than Carmat SA. However, DATA MODUL is 2.32 times less risky than Carmat SA. It trades about -0.07 of its potential returns per unit of risk. Carmat SA is currently generating about -0.1 per unit of risk. If you would invest  4,050  in DATA MODUL on October 9, 2024 and sell it today you would lose (1,410) from holding DATA MODUL or give up 34.81% of portfolio value over 90 days.

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

DATA MODUL   vs.  Carmat SA

DATA MODUL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DATA MODUL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, DATA MODUL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 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.

Pair Trading with DATA MODUL and Carmat SA

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

The idea behind DATA MODUL and Carmat 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.