Correlation Between DBV Technologies and Carmat

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Can any of the company-specific risk be diversified away by investing in both DBV Technologies and Carmat 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 DBV Technologies and Carmat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBV Technologies SA and Carmat, you can compare the effects of market volatilities on DBV Technologies and Carmat 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 DBV Technologies with a short position of Carmat. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBV Technologies and Carmat.

Diversification Opportunities for DBV Technologies and Carmat

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between DBV and Carmat is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DBV Technologies SA and Carmat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat and DBV Technologies 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 DBV Technologies SA are associated (or correlated) with Carmat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat has no effect on the direction of DBV Technologies i.e., DBV Technologies and Carmat go up and down completely randomly.

Pair Corralation between DBV Technologies and Carmat

Assuming the 90 days trading horizon DBV Technologies SA is expected to generate 1.62 times more return on investment than Carmat. However, DBV Technologies is 1.62 times more volatile than Carmat. It trades about -0.01 of its potential returns per unit of risk. Carmat is currently generating about -0.12 per unit of risk. If you would invest  65.00  in DBV Technologies SA on September 28, 2024 and sell it today you would lose (3.00) from holding DBV Technologies SA or give up 4.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DBV Technologies SA  vs.  Carmat

 Performance 
       Timeline  
DBV Technologies 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days DBV Technologies SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DBV Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Carmat 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Carmat has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

DBV Technologies and Carmat Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DBV Technologies and Carmat

The main advantage of trading using opposite DBV Technologies and Carmat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBV Technologies position performs unexpectedly, Carmat 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 will offset losses from the drop in Carmat's long position.
The idea behind DBV Technologies SA and Carmat 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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