Correlation Between CarsalesCom and NEL ASA
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and NEL ASA 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 NEL ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and NEL ASA ADR30, you can compare the effects of market volatilities on CarsalesCom and NEL ASA 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 NEL ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and NEL ASA.
Diversification Opportunities for CarsalesCom and NEL ASA
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CarsalesCom and NEL is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and NEL ASA ADR30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEL ASA ADR30 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 NEL ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEL ASA ADR30 has no effect on the direction of CarsalesCom i.e., CarsalesCom and NEL ASA go up and down completely randomly.
Pair Corralation between CarsalesCom and NEL ASA
Assuming the 90 days horizon CarsalesCom is expected to generate 0.16 times more return on investment than NEL ASA. However, CarsalesCom is 6.44 times less risky than NEL ASA. It trades about 0.54 of its potential returns per unit of risk. NEL ASA ADR30 is currently generating about -0.16 per unit of risk. If you would invest 2,200 in CarsalesCom on September 2, 2024 and sell it today you would earn a total of 340.00 from holding CarsalesCom or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. NEL ASA ADR30
Performance |
| Timeline |
| CarsalesCom |
| NEL ASA ADR30 |
CarsalesCom and NEL ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and NEL ASA
The main advantage of trading using opposite CarsalesCom and NEL ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, NEL ASA 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 NEL ASA will offset losses from the drop in NEL ASA's long position.| CarsalesCom vs. URBAN OUTFITTERS | CarsalesCom vs. AM EAGLE OUTFITTERS | CarsalesCom vs. ADRIATIC METALS LS 013355 | CarsalesCom vs. MEDICAL FACILITIES NEW |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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