Correlation Between Orapi SA and Carbios

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

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

Diversification Opportunities for Orapi SA and Carbios

-0.66

Correlation Coefficient

Orapi SA  Carbios

Excellent diversification

The 3 months correlation between Orapi and Carbios is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Orapi SA and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios and Orapi 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 Orapi 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 Orapi SA i.e., Orapi SA and Carbios go up and down completely randomly.

Pair Corralation between Orapi SA and Carbios

Assuming the 90 days trading horizon Orapi SA is expected to generate 0.24 times more return on investment than Carbios. However, Orapi SA is 4.12 times less risky than Carbios. It trades about 0.12 of its potential returns per unit of risk. Carbios is currently generating about -0.37 per unit of risk. If you would invest  598.00  in Orapi SA on September 2, 2024 and sell it today you would earn a total of  52.00  from holding Orapi SA or generate 8.7% return on investment over 90 days.

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

Orapi SA  vs.  Carbios

Orapi SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orapi SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orapi SA 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 Orapi SA and Carbios

The main advantage of trading using opposite Orapi SA and Carbios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orapi SA 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 Orapi 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.