Correlation Between Intouch Holdings and Carmat SA

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

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

Diversification Opportunities for Intouch Holdings and Carmat SA

0.34

Correlation Coefficient

Intouch Holdings  Carmat SA

Weak diversification

The 3 months correlation between Intouch and Carmat is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Holdings Public and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA and Intouch Holdings 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 Intouch Holdings Public 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 Intouch Holdings i.e., Intouch Holdings and Carmat SA go up and down completely randomly.

Pair Corralation between Intouch Holdings and Carmat SA

Assuming the 90 days trading horizon Intouch Holdings Public is expected to generate 0.36 times more return on investment than Carmat SA. However, Intouch Holdings Public is 2.77 times less risky than Carmat SA. It trades about -0.09 of its potential returns per unit of risk. Carmat SA is currently generating about -0.04 per unit of risk. If you would invest  244.00  in Intouch Holdings Public on December 30, 2024 and sell it today you would lose (24.00) from holding Intouch Holdings Public or give up 9.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Intouch Holdings Public  vs.  Carmat SA

Intouch Holdings Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intouch Holdings Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

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 fragile 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 Intouch Holdings and Carmat SA

The main advantage of trading using opposite Intouch Holdings and Carmat SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intouch Holdings 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 Intouch Holdings Public 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.