Correlation Between Carsales and Chalice Mining
Can any of the company-specific risk be diversified away by investing in both Carsales and Chalice Mining 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 Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and Chalice Mining Limited, you can compare the effects of market volatilities on Carsales and Chalice Mining 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 Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Chalice Mining.
Diversification Opportunities for Carsales and Chalice Mining
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carsales and Chalice is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining 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 Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Carsales i.e., Carsales and Chalice Mining go up and down completely randomly.
Pair Corralation between Carsales and Chalice Mining
Assuming the 90 days horizon CarsalesCom is expected to generate 0.3 times more return on investment than Chalice Mining. However, CarsalesCom is 3.34 times less risky than Chalice Mining. It trades about 0.07 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.04 per unit of risk. If you would invest 1,338 in CarsalesCom on October 13, 2024 and sell it today you would earn a total of 922.00 from holding CarsalesCom or generate 68.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. Chalice Mining Limited
Performance |
| Timeline |
| CarsalesCom |
| Chalice Mining |
Carsales and Chalice Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Chalice Mining
The main advantage of trading using opposite Carsales and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Chalice Mining 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 Chalice Mining will offset losses from the drop in Chalice Mining's long position.| Carsales vs. OFFICE DEPOT | Carsales vs. GRUPO CARSO A1 | Carsales vs. Motorcar Parts of | Carsales vs. OPERA SOFTWARE |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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