Correlation Between REINET INVESTMENTS and Carmat SA

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

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

Diversification Opportunities for REINET INVESTMENTS and Carmat SA

0.08

Correlation Coefficient

REINET INVESTMENTS  Carmat SA

Significant diversification

The 3 months correlation between REINET and Carmat is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA and REINET INVESTMENTS 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 REINET INVESTMENTS SCA are associated (or correlated) with Carmat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat SA has no effect on the direction of REINET INVESTMENTS i.e., REINET INVESTMENTS and Carmat SA go up and down completely randomly.

Pair Corralation between REINET INVESTMENTS and Carmat SA

Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to generate 0.53 times more return on investment than Carmat SA. However, REINET INVESTMENTS SCA is 1.9 times less risky than Carmat SA. It trades about 0.01 of its potential returns per unit of risk. Carmat SA is currently generating about -0.02 per unit of risk. If you would invest  2,420  in REINET INVESTMENTS SCA on November 28, 2024 and sell it today you would earn a total of  0.00  from holding REINET INVESTMENTS SCA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

REINET INVESTMENTS SCA  vs.  Carmat SA

REINET INVESTMENTS SCA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REINET INVESTMENTS SCA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, REINET INVESTMENTS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Carmat SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carmat SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with REINET INVESTMENTS and Carmat SA

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

The idea behind REINET INVESTMENTS SCA and Carmat SA 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.