Correlation Between Grard Perrier and Carbios

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

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

Diversification Opportunities for Grard Perrier and Carbios

0.25

Correlation Coefficient

Grard Perrier  Carbios

Modest diversification

The 3 months correlation between Grard and Carbios is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Grard Perrier Industrie and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios and Grard Perrier 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 Grard Perrier Industrie 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 Grard Perrier i.e., Grard Perrier and Carbios go up and down completely randomly.

Pair Corralation between Grard Perrier and Carbios

Assuming the 90 days trading horizon Grard Perrier Industrie is expected to under-perform the Carbios. But the stock apears to be less risky and, when comparing its historical volatility, Grard Perrier Industrie is 3.56 times less risky than Carbios. The stock trades about -0.12 of its potential returns per unit of risk. The Carbios is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  679.00  in Carbios on December 28, 2024 and sell it today you would lose (76.00) from holding Carbios or give up 11.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Grard Perrier Industrie  vs.  Carbios

Grard Perrier Industrie

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grard Perrier Industrie has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Carbios

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carbios has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Carbios is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Grard Perrier and Carbios

The main advantage of trading using opposite Grard Perrier and Carbios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grard Perrier 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 Grard Perrier Industrie 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.