Correlation Between H2O Retailing and CARSALESCOM
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and CARSALESCOM 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 H2O Retailing and CARSALESCOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and CARSALESCOM, you can compare the effects of market volatilities on H2O Retailing and CARSALESCOM 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 H2O Retailing with a short position of CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and CARSALESCOM.
Diversification Opportunities for H2O Retailing and CARSALESCOM
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between H2O and CARSALESCOM is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and H2O Retailing 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 H2O Retailing are associated (or correlated) with CARSALESCOM. 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 H2O Retailing i.e., H2O Retailing and CARSALESCOM go up and down completely randomly.
Pair Corralation between H2O Retailing and CARSALESCOM
Assuming the 90 days horizon H2O Retailing is expected to generate 1.74 times more return on investment than CARSALESCOM. However, H2O Retailing is 1.74 times more volatile than CARSALESCOM. It trades about 0.07 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.07 per unit of risk. If you would invest 649.00 in H2O Retailing on October 11, 2024 and sell it today you would earn a total of 701.00 from holding H2O Retailing or generate 108.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. CARSALESCOM
Performance |
| Timeline |
| H2O Retailing |
| CARSALESCOM |
H2O Retailing and CARSALESCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and CARSALESCOM
The main advantage of trading using opposite H2O Retailing and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM's long position.| H2O Retailing vs. Charter Communications | H2O Retailing vs. China BlueChemical | H2O Retailing vs. TELECOM ITALIA | H2O Retailing vs. Telecom Argentina SA |
| CARSALESCOM vs. Corporate Travel Management | CARSALESCOM vs. Jupiter Fund Management | CARSALESCOM vs. MeVis Medical Solutions | CARSALESCOM vs. Coor Service Management |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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