Correlation Between CarsalesCom and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and Macmahon Holdings 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 CarsalesCom and Macmahon Holdings 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 Macmahon Holdings Limited, you can compare the effects of market volatilities on CarsalesCom and Macmahon Holdings 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 CarsalesCom with a short position of Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Macmahon Holdings.
Diversification Opportunities for CarsalesCom and Macmahon Holdings
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between CarsalesCom and Macmahon is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings and CarsalesCom 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of CarsalesCom i.e., CarsalesCom and Macmahon Holdings go up and down completely randomly.
Pair Corralation between CarsalesCom and Macmahon Holdings
Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to generate 1.38 times more return on investment than Macmahon Holdings. However, CarsalesCom is 1.38 times more volatile than Macmahon Holdings Limited. It trades about 0.14 of its potential returns per unit of risk. Macmahon Holdings Limited is currently generating about -0.16 per unit of risk. If you would invest 4,725 in CarsalesCom Ltd ADR on September 19, 2024 and sell it today you would earn a total of 682.00 from holding CarsalesCom Ltd ADR or generate 14.43% 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. Macmahon Holdings Limited
Performance |
| Timeline |
| CarsalesCom ADR |
| Macmahon Holdings |
CarsalesCom and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and Macmahon Holdings
The main advantage of trading using opposite CarsalesCom and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Sabio Holdings | CarsalesCom vs. PayPal Holdings | CarsalesCom vs. McDonalds |
| Macmahon Holdings vs. BorgWarner | Macmahon Holdings vs. RCS MediaGroup SpA | Macmahon Holdings vs. Playtika Holding Corp | Macmahon Holdings vs. CarsalesCom Ltd ADR |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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