Correlation Between Carsales and Corsair Gaming
Can any of the company-specific risk be diversified away by investing in both Carsales and Corsair Gaming 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 Corsair Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Corsair Gaming, you can compare the effects of market volatilities on Carsales and Corsair Gaming 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 Corsair Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Corsair Gaming.
Diversification Opportunities for Carsales and Corsair Gaming
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carsales and Corsair is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming 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 Carsales are associated (or correlated) with Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Carsales i.e., Carsales and Corsair Gaming go up and down completely randomly.
Pair Corralation between Carsales and Corsair Gaming
Assuming the 90 days trading horizon Carsales is expected to generate 1.54 times less return on investment than Corsair Gaming. But when comparing it to its historical volatility, Carsales is 4.66 times less risky than Corsair Gaming. It trades about 0.44 of its potential returns per unit of risk. Corsair Gaming is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 589.00 in Corsair Gaming on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Corsair Gaming or generate 16.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. Corsair Gaming
Performance |
| Timeline |
| Carsales |
| Corsair Gaming |
Carsales and Corsair Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Corsair Gaming
The main advantage of trading using opposite Carsales and Corsair Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Corsair Gaming 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 Corsair Gaming will offset losses from the drop in Corsair Gaming's long position.The idea behind Carsales and Corsair Gaming pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Corsair Gaming vs. Big 5 Sporting | Corsair Gaming vs. BII Railway Transportation | Corsair Gaming vs. Data3 Limited | Corsair Gaming vs. Public Storage |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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