Correlation Between Auto Trader and K3 Business
Can any of the company-specific risk be diversified away by investing in both Auto Trader and K3 Business 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 Auto Trader and K3 Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and K3 Business Technology, you can compare the effects of market volatilities on Auto Trader and K3 Business 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 Auto Trader with a short position of K3 Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and K3 Business.
Diversification Opportunities for Auto Trader and K3 Business
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auto and KBT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and K3 Business Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K3 Business Technology and Auto Trader 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 Auto Trader Group are associated (or correlated) with K3 Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K3 Business Technology has no effect on the direction of Auto Trader i.e., Auto Trader and K3 Business go up and down completely randomly.
Pair Corralation between Auto Trader and K3 Business
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 1.14 times more return on investment than K3 Business. However, Auto Trader is 1.14 times more volatile than K3 Business Technology. It trades about 0.06 of its potential returns per unit of risk. K3 Business Technology is currently generating about -0.11 per unit of risk. If you would invest 61,243 in Auto Trader Group on August 29, 2024 and sell it today you would earn a total of 21,917 from holding Auto Trader Group or generate 35.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. K3 Business Technology
Performance |
| Timeline |
| Auto Trader Group |
| K3 Business Technology |
Auto Trader and K3 Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and K3 Business
The main advantage of trading using opposite Auto Trader and K3 Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, K3 Business 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 K3 Business will offset losses from the drop in K3 Business' long position.| Auto Trader vs. The Mercantile Investment | Auto Trader vs. Herald Investment Trust | Auto Trader vs. Diversified Energy | Auto Trader vs. Orient Telecoms |
| K3 Business vs. Samsung Electronics Co | K3 Business vs. Samsung Electronics Co | K3 Business vs. Hyundai Motor | K3 Business vs. Toyota Motor Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |