Correlation Between Industria and Carters

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

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

Diversification Opportunities for Industria and Carters

0.11

Correlation Coefficient

Industria  Carters

Average diversification

The 3 months correlation between Industria and Carters is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and Industria 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 Industria de Diseno are associated (or correlated) with Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Industria i.e., Industria and Carters go up and down completely randomly.

Pair Corralation between Industria and Carters

Assuming the 90 days horizon Industria de Diseno is expected to generate 0.6 times more return on investment than Carters. However, Industria de Diseno is 1.66 times less risky than Carters. It trades about -0.02 of its potential returns per unit of risk. Carters is currently generating about -0.12 per unit of risk. If you would invest  2,591  in Industria de Diseno on December 27, 2024 and sell it today you would lose (79.00) from holding Industria de Diseno or give up 3.05% of portfolio value over 90 days.

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

Industria de Diseno  vs.  Carters

Industria de Diseno

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industria de Diseno has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Industria is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Industria and Carters

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

The idea behind Industria de Diseno and Carters 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.