Correlation Between Carsales and Avance Gas
Can any of the company-specific risk be diversified away by investing in both Carsales and Avance Gas 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 Avance Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Avance Gas Holding, you can compare the effects of market volatilities on Carsales and Avance Gas 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 Avance Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Avance Gas.
Diversification Opportunities for Carsales and Avance Gas
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Carsales and Avance is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and Avance Gas Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avance Gas Holding 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 Avance Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avance Gas Holding has no effect on the direction of Carsales i.e., Carsales and Avance Gas go up and down completely randomly.
Pair Corralation between Carsales and Avance Gas
Assuming the 90 days trading horizon Carsales is expected to under-perform the Avance Gas. But the stock apears to be less risky and, when comparing its historical volatility, Carsales is 2.48 times less risky than Avance Gas. The stock trades about -0.15 of its potential returns per unit of risk. The Avance Gas Holding is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 580.00 in Avance Gas Holding on September 13, 2024 and sell it today you would earn a total of 124.00 from holding Avance Gas Holding or generate 21.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Carsales vs. Avance Gas Holding
Performance |
| Timeline |
| Carsales |
| Avance Gas Holding |
Carsales and Avance Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Avance Gas
The main advantage of trading using opposite Carsales and Avance Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Avance Gas 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 Avance Gas will offset losses from the drop in Avance Gas' long position.The idea behind Carsales and Avance Gas Holding 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.| Avance Gas vs. Commonwealth Bank of | Avance Gas vs. The Hanover Insurance | Avance Gas vs. Chiba Bank | Avance Gas vs. CN MODERN DAIRY |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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