Correlation Between Maat Pharma and Carbios

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

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

Diversification Opportunities for Maat Pharma and Carbios

-0.55

Correlation Coefficient

Maat Pharma  Carbios

Excellent diversification

The 3 months correlation between Maat and Carbios is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Maat Pharma SA and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios and Maat Pharma 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 Maat Pharma SA are associated (or correlated) with Carbios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios has no effect on the direction of Maat Pharma i.e., Maat Pharma and Carbios go up and down completely randomly.

Pair Corralation between Maat Pharma and Carbios

Assuming the 90 days trading horizon Maat Pharma SA is expected to generate 0.33 times more return on investment than Carbios. However, Maat Pharma SA is 3.05 times less risky than Carbios. It trades about 0.04 of its potential returns per unit of risk. Carbios is currently generating about -0.12 per unit of risk. If you would invest  740.00  in Maat Pharma SA on September 29, 2024 and sell it today you would earn a total of  58.00  from holding Maat Pharma SA or generate 7.84% return on investment over 90 days.

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

Maat Pharma SA  vs.  Carbios

Maat Pharma SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maat Pharma SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maat Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Carbios

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carbios has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Maat Pharma and Carbios

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

The idea behind Maat Pharma SA and Carbios 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.