Correlation Between CARSALES and Beijing Tong
Can any of the company-specific risk be diversified away by investing in both CARSALES and Beijing Tong 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 Beijing Tong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Beijing Tong Ren, you can compare the effects of market volatilities on CARSALES and Beijing Tong 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 Beijing Tong. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and Beijing Tong.
Diversification Opportunities for CARSALES and Beijing Tong
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CARSALES and Beijing is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and Beijing Tong Ren in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Tong Ren 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 are associated (or correlated) with Beijing Tong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Tong Ren has no effect on the direction of CARSALES i.e., CARSALES and Beijing Tong go up and down completely randomly.
Pair Corralation between CARSALES and Beijing Tong
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.82 times more return on investment than Beijing Tong. However, CARSALESCOM is 1.23 times less risky than Beijing Tong. It trades about 0.4 of its potential returns per unit of risk. Beijing Tong Ren is currently generating about 0.15 per unit of risk. If you would invest 2,280 in CARSALESCOM on September 5, 2024 and sell it today you would earn a total of 280.00 from holding CARSALESCOM or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CARSALESCOM vs. Beijing Tong Ren
Performance |
| Timeline |
| CARSALESCOM |
| Beijing Tong Ren |
CARSALES and Beijing Tong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and Beijing Tong
The main advantage of trading using opposite CARSALES and Beijing Tong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES position performs unexpectedly, Beijing Tong 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 Beijing Tong will offset losses from the drop in Beijing Tong's long position.| CARSALES vs. ITALIAN WINE BRANDS | CARSALES vs. Grupo Carso SAB | CARSALES vs. MACOM Technology Solutions | CARSALES vs. Cars Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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