Correlation Between Poxel SA and Carmat

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

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

Diversification Opportunities for Poxel SA and Carmat

-0.25

Correlation Coefficient

Poxel SA  Carmat

Very good diversification

The 3 months correlation between Poxel and Carmat is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Poxel SA and Carmat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat and Poxel 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 Poxel SA are associated (or correlated) with Carmat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat has no effect on the direction of Poxel SA i.e., Poxel SA and Carmat go up and down completely randomly.

Pair Corralation between Poxel SA and Carmat

Assuming the 90 days trading horizon Poxel SA is expected to generate 2.52 times more return on investment than Carmat. However, Poxel SA is 2.52 times more volatile than Carmat. It trades about 0.03 of its potential returns per unit of risk. Carmat is currently generating about -0.03 per unit of risk. If you would invest  20.00  in Poxel SA on December 4, 2024 and sell it today you would lose (3.00) from holding Poxel SA or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Poxel SA  vs.  Carmat

Poxel SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Poxel SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Poxel SA reported solid returns over the last few months and may actually be approaching a breakup point.

Carmat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carmat has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Poxel SA and Carmat

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

The idea behind Poxel SA and Carmat 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 Transaction History module to view history of all your transactions and understand their impact on performance.