Correlation Between CarsalesCom and NORSKE SKOG
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and NORSKE SKOG 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 NORSKE SKOG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and NORSKE SKOG AS, you can compare the effects of market volatilities on CarsalesCom and NORSKE SKOG 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 NORSKE SKOG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and NORSKE SKOG.
Diversification Opportunities for CarsalesCom and NORSKE SKOG
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CarsalesCom and NORSKE is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and NORSKE SKOG AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORSKE SKOG AS 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 are associated (or correlated) with NORSKE SKOG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORSKE SKOG AS has no effect on the direction of CarsalesCom i.e., CarsalesCom and NORSKE SKOG go up and down completely randomly.
Pair Corralation between CarsalesCom and NORSKE SKOG
Assuming the 90 days horizon CarsalesCom is expected to generate 0.35 times more return on investment than NORSKE SKOG. However, CarsalesCom is 2.83 times less risky than NORSKE SKOG. It trades about 0.06 of its potential returns per unit of risk. NORSKE SKOG AS is currently generating about -0.14 per unit of risk. If you would invest 2,201 in CarsalesCom on November 2, 2024 and sell it today you would earn a total of 179.00 from holding CarsalesCom or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
CarsalesCom vs. NORSKE SKOG AS
Performance |
| Timeline |
| CarsalesCom |
| NORSKE SKOG AS |
CarsalesCom and NORSKE SKOG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and NORSKE SKOG
The main advantage of trading using opposite CarsalesCom and NORSKE SKOG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, NORSKE SKOG 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 NORSKE SKOG will offset losses from the drop in NORSKE SKOG's long position.| CarsalesCom vs. GLG LIFE TECH | CarsalesCom vs. Air Lease | CarsalesCom vs. Global Ship Lease | CarsalesCom vs. VELA TECHNOLPLC LS 0001 |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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