Correlation Between CARPENTER and Revival Gold

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

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

Diversification Opportunities for CARPENTER and Revival Gold

-0.09

Correlation Coefficient

CARPENTER  Revival Gold

Good diversification

The 3 months correlation between CARPENTER and Revival is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CARPENTER TECHNOLOGY P and Revival Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revival Gold and CARPENTER 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 CARPENTER TECHNOLOGY P are associated (or correlated) with Revival Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revival Gold has no effect on the direction of CARPENTER i.e., CARPENTER and Revival Gold go up and down completely randomly.

Pair Corralation between CARPENTER and Revival Gold

Assuming the 90 days trading horizon CARPENTER TECHNOLOGY P is expected to generate 0.13 times more return on investment than Revival Gold. However, CARPENTER TECHNOLOGY P is 7.43 times less risky than Revival Gold. It trades about -0.01 of its potential returns per unit of risk. Revival Gold is currently generating about -0.02 per unit of risk. If you would invest  10,039  in CARPENTER TECHNOLOGY P on September 12, 2024 and sell it today you would lose (29.00) from holding CARPENTER TECHNOLOGY P or give up 0.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CARPENTER TECHNOLOGY P  vs.  Revival Gold

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Revival Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revival Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Revival Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CARPENTER and Revival Gold

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

The idea behind CARPENTER TECHNOLOGY P and Revival Gold 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.