Correlation Between Carmat SA and SIMS METAL

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

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

Diversification Opportunities for Carmat SA and SIMS METAL

-0.5

Correlation Coefficient

Carmat SA  SIMS METAL

Very good diversification

The 3 months correlation between Carmat and SIMS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT and Carmat 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 Carmat SA are associated (or correlated) with SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of Carmat SA i.e., Carmat SA and SIMS METAL go up and down completely randomly.

Pair Corralation between Carmat SA and SIMS METAL

Assuming the 90 days horizon Carmat SA is expected to under-perform the SIMS METAL. In addition to that, Carmat SA is 10.49 times more volatile than SIMS METAL MGT. It trades about -0.04 of its total potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.15 per unit of volatility. If you would invest  795.00  in SIMS METAL MGT on April 23, 2025 and sell it today you would earn a total of  115.00  from holding SIMS METAL MGT or generate 14.47% return on investment over 90 days.

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

Carmat SA  vs.  SIMS METAL MGT

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SIMS METAL MGT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIMS METAL MGT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, SIMS METAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carmat SA and SIMS METAL

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

The idea behind Carmat SA and SIMS METAL MGT 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.

Check out your portfolio center.

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.