Correlation Between Aluminumof China and Carsales
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and Carsales 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 Aluminumof China and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and CarsalesCom, you can compare the effects of market volatilities on Aluminumof China and Carsales 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 Aluminumof China with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Carsales.
Diversification Opportunities for Aluminumof China and Carsales
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aluminumof and Carsales is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and Aluminumof China 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 Aluminum of are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Aluminumof China i.e., Aluminumof China and Carsales go up and down completely randomly.
Pair Corralation between Aluminumof China and Carsales
Assuming the 90 days horizon Aluminum of is expected to generate 2.17 times more return on investment than Carsales. However, Aluminumof China is 2.17 times more volatile than CarsalesCom. It trades about 0.06 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.09 per unit of risk. If you would invest 29.00 in Aluminum of on August 24, 2024 and sell it today you would earn a total of 28.00 from holding Aluminum of or generate 96.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. CarsalesCom
Performance |
| Timeline |
| Aluminumof China |
| CarsalesCom |
Aluminumof China and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Carsales
The main advantage of trading using opposite Aluminumof China and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Aluminumof China vs. Charter Communications | Aluminumof China vs. SALESFORCE INC CDR | Aluminumof China vs. CODERE ONLINE LUX | Aluminumof China vs. PACIFIC ONLINE |
| Carsales vs. Gruppo Mutuionline SpA | Carsales vs. BURLINGTON STORES | Carsales vs. Caseys General Stores | Carsales vs. COSTCO WHOLESALE CDR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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