Correlation Between CarsalesCom and Safety Shot
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and Safety Shot 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 Safety Shot 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 Safety Shot, you can compare the effects of market volatilities on CarsalesCom and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Safety Shot.
Diversification Opportunities for CarsalesCom and Safety Shot
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between CarsalesCom and Safety is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of CarsalesCom i.e., CarsalesCom and Safety Shot go up and down completely randomly.
Pair Corralation between CarsalesCom and Safety Shot
Assuming the 90 days horizon CarsalesCom is expected to generate 2.17 times less return on investment than Safety Shot. But when comparing it to its historical volatility, CarsalesCom Ltd ADR is 3.14 times less risky than Safety Shot. It trades about 0.05 of its potential returns per unit of risk. Safety Shot is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Safety Shot on October 11, 2024 and sell it today you would earn a total of 0.00 from holding Safety Shot or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.89% |
| Values | Daily Returns |
CarsalesCom Ltd ADR vs. Safety Shot
Performance |
| Timeline |
| CarsalesCom ADR |
| Safety Shot |
CarsalesCom and Safety Shot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and Safety Shot
The main advantage of trading using opposite CarsalesCom and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
| Safety Shot vs. American Vanguard | Safety Shot vs. Sensient Technologies | Safety Shot vs. Axalta Coating Systems | Safety Shot vs. Codexis |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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