Correlation Between Carnival and Seluxit AS

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

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

Diversification Opportunities for Carnival and Seluxit AS

-0.35

Correlation Coefficient

Carnival  Seluxit AS

Very good diversification

The 3 months correlation between Carnival and Seluxit is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Seluxit AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seluxit AS and Carnival 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 Carnival are associated (or correlated) with Seluxit AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seluxit AS has no effect on the direction of Carnival i.e., Carnival and Seluxit AS go up and down completely randomly.

Pair Corralation between Carnival and Seluxit AS

Considering the 90-day investment horizon Carnival is expected to under-perform the Seluxit AS. But the stock apears to be less risky and, when comparing its historical volatility, Carnival is 3.63 times less risky than Seluxit AS. The stock trades about -0.02 of its potential returns per unit of risk. The Seluxit AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Seluxit AS on January 24, 2024 and sell it today you would earn a total of  32.00  from holding Seluxit AS or generate 11.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.04%
Values	Daily Returns

Carnival  vs.  Seluxit AS

Carnival

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Seluxit AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seluxit AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Seluxit AS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnival and Seluxit AS

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

The idea behind Carnival and Seluxit AS 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.