Correlation Between TRADEGATE and Carrefour

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

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

Diversification Opportunities for TRADEGATE and Carrefour

-0.03

Correlation Coefficient

TRADEGATE  Carrefour

Good diversification

The 3 months correlation between TRADEGATE and Carrefour is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA and TRADEGATE 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 TRADEGATE are associated (or correlated) with Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of TRADEGATE i.e., TRADEGATE and Carrefour go up and down completely randomly.

Pair Corralation between TRADEGATE and Carrefour

Assuming the 90 days trading horizon TRADEGATE is expected to generate 0.11 times more return on investment than Carrefour. However, TRADEGATE is 9.27 times less risky than Carrefour. It trades about 0.05 of its potential returns per unit of risk. Carrefour SA is currently generating about -0.09 per unit of risk. If you would invest  8,950  in TRADEGATE on October 26, 2024 and sell it today you would earn a total of  50.00  from holding TRADEGATE or generate 0.56% return on investment over 90 days.

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

TRADEGATE  vs.  Carrefour SA

TRADEGATE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TRADEGATE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Carrefour SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 TRADEGATE and Carrefour

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

The idea behind TRADEGATE and Carrefour 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.