Correlation Between Poxel SA and Carbios

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

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

Diversification Opportunities for Poxel SA and Carbios

0.83

Correlation Coefficient

Poxel SA  Carbios

Very poor diversification

The 3 months correlation between Poxel and Carbios is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Poxel SA and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios 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 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 Poxel SA i.e., Poxel SA and Carbios go up and down completely randomly.

Pair Corralation between Poxel SA and Carbios

Assuming the 90 days trading horizon Poxel SA is expected to under-perform the Carbios. But the stock apears to be less risky and, when comparing its historical volatility, Poxel SA is 1.11 times less risky than Carbios. The stock trades about -0.16 of its potential returns per unit of risk. The Carbios is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,150  in Carbios on September 29, 2024 and sell it today you would lose (1,450) from holding Carbios or give up 67.44% of portfolio value over 90 days.

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

Poxel SA  vs.  Carbios

Poxel SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poxel SA 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.

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 Poxel SA and Carbios

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

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.