Correlation Between Carsales and INTER CARS
Can any of the company-specific risk be diversified away by investing in both Carsales and INTER CARS 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 INTER CARS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and INTER CARS SA, you can compare the effects of market volatilities on Carsales and INTER CARS 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 INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and INTER CARS.
Diversification Opportunities for Carsales and INTER CARS
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and INTER is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA 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 INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of Carsales i.e., Carsales and INTER CARS go up and down completely randomly.
Pair Corralation between Carsales and INTER CARS
Assuming the 90 days horizon CarsalesCom is expected to generate 0.71 times more return on investment than INTER CARS. However, CarsalesCom is 1.41 times less risky than INTER CARS. It trades about 0.1 of its potential returns per unit of risk. INTER CARS SA is currently generating about 0.03 per unit of risk. If you would invest 1,273 in CarsalesCom on September 3, 2024 and sell it today you would earn a total of 1,267 from holding CarsalesCom or generate 99.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. INTER CARS SA
Performance |
| Timeline |
| CarsalesCom |
| INTER CARS SA |
Carsales and INTER CARS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and INTER CARS
The main advantage of trading using opposite Carsales and INTER CARS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, INTER CARS 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 INTER CARS will offset losses from the drop in INTER CARS's long position.| Carsales vs. Hyrican Informationssysteme Aktiengesellschaft | Carsales vs. Fidelity National Information | Carsales vs. Science Applications International | Carsales vs. Nok Airlines PCL |
| INTER CARS vs. MOVIE GAMES SA | INTER CARS vs. FRACTAL GAMING GROUP | INTER CARS vs. Constellation Software | INTER CARS vs. Alfa Financial Software |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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