Correlation Between Carsales and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Carsales and KVH Industries 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 Carsales and KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom Ltd ADR and KVH Industries, you can compare the effects of market volatilities on Carsales and KVH Industries 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 Carsales with a short position of KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and KVH Industries.
Diversification Opportunities for Carsales and KVH Industries
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and KVH is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and Carsales 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 CarsalesCom Ltd ADR are associated (or correlated) with KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Carsales i.e., Carsales and KVH Industries go up and down completely randomly.
Pair Corralation between Carsales and KVH Industries
Assuming the 90 days horizon Carsales is expected to generate 3.69 times less return on investment than KVH Industries. In addition to that, Carsales is 1.33 times more volatile than KVH Industries. It trades about 0.07 of its total potential returns per unit of risk. KVH Industries is currently generating about 0.32 per unit of volatility. If you would invest 476.00 in KVH Industries on August 27, 2024 and sell it today you would earn a total of 72.00 from holding KVH Industries or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom Ltd ADR vs. KVH Industries
Performance |
| Timeline |
| CarsalesCom ADR |
| KVH Industries |
Carsales and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and KVH Industries
The main advantage of trading using opposite Carsales and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Carsales vs. Quizam Media | Carsales vs. DGTL Holdings | Carsales vs. Tinybeans Group Limited | Carsales vs. Sabio Holdings |
| KVH Industries vs. Ichor Holdings | KVH Industries vs. Fabrinet | KVH Industries vs. Hello Group | KVH Industries vs. Ultra Clean Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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