Correlation Between MAHLE Metal and Carnival Plc

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

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

Diversification Opportunities for MAHLE Metal and Carnival Plc

-0.43

Correlation Coefficient

MAHLE Metal  Carnival Plc

Very good diversification

The 3 months correlation between MAHLE and Carnival is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Carnival plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival plc and MAHLE Metal 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 MAHLE Metal Leve are associated (or correlated) with Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival plc has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Carnival Plc go up and down completely randomly.

Pair Corralation between MAHLE Metal and Carnival Plc

Assuming the 90 days trading horizon MAHLE Metal Leve is expected to under-perform the Carnival Plc. But the stock apears to be less risky and, when comparing its historical volatility, MAHLE Metal Leve is 1.31 times less risky than Carnival Plc. The stock trades about -0.08 of its potential returns per unit of risk. The Carnival plc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12,432  in Carnival plc on October 26, 2024 and sell it today you would earn a total of  3,488  from holding Carnival plc or generate 28.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MAHLE Metal Leve  vs.  Carnival plc

MAHLE Metal Leve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAHLE Metal Leve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Carnival plc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Carnival Plc sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAHLE Metal and Carnival Plc

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

The idea behind MAHLE Metal Leve and Carnival plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.