Correlation Between Genfit and Carmat

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

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

Diversification Opportunities for Genfit and Carmat

0.84

Correlation Coefficient

Genfit  Carmat

Very poor diversification

The 3 months correlation between Genfit and Carmat is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Genfit and Carmat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat and Genfit 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 Genfit 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 Genfit i.e., Genfit and Carmat go up and down completely randomly.

Pair Corralation between Genfit and Carmat

Assuming the 90 days trading horizon Genfit is expected to under-perform the Carmat. But the stock apears to be less risky and, when comparing its historical volatility, Genfit is 2.06 times less risky than Carmat. The stock trades about -0.34 of its potential returns per unit of risk. The Carmat is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Carmat on September 28, 2024 and sell it today you would lose (11.00) from holding Carmat or give up 9.4% of portfolio value over 90 days.

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

Genfit  vs.  Carmat

Genfit

Risk-Adjusted Performance

0 of 100

Very Weak

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

Carmat

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Genfit and Carmat

The main advantage of trading using opposite Genfit and Carmat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genfit 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 Genfit 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.