Correlation Between Icade SA and Carmila SA

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

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

Diversification Opportunities for Icade SA and Carmila SA

0.16

Correlation Coefficient

Icade SA  Carmila SA

Average diversification

The 3 months correlation between Icade and Carmila is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Icade SA and Carmila SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmila SA and Icade 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 Icade SA are associated (or correlated) with Carmila SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmila SA has no effect on the direction of Icade SA i.e., Icade SA and Carmila SA go up and down completely randomly.

Pair Corralation between Icade SA and Carmila SA

Assuming the 90 days trading horizon Icade SA is expected to generate 3.22 times less return on investment than Carmila SA. In addition to that, Icade SA is 2.13 times more volatile than Carmila SA. It trades about 0.02 of its total potential returns per unit of risk. Carmila SA is currently generating about 0.13 per unit of volatility. If you would invest  1,610  in Carmila SA on December 1, 2024 and sell it today you would earn a total of  124.00  from holding Carmila SA or generate 7.7% return on investment over 90 days.

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

Icade SA  vs.  Carmila SA

Icade SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icade SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Icade SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carmila SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carmila SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carmila SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Icade SA and Carmila SA

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

The idea behind Icade SA and Carmila 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..