Correlation Between Carsales and DATANG INTL
Can any of the company-specific risk be diversified away by investing in both Carsales and DATANG INTL 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 DATANG INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and DATANG INTL POW, you can compare the effects of market volatilities on Carsales and DATANG INTL 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 DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and DATANG INTL.
Diversification Opportunities for Carsales and DATANG INTL
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carsales and DATANG is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW 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 DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of Carsales i.e., Carsales and DATANG INTL go up and down completely randomly.
Pair Corralation between Carsales and DATANG INTL
Assuming the 90 days trading horizon Carsales is expected to generate 0.56 times more return on investment than DATANG INTL. However, Carsales is 1.78 times less risky than DATANG INTL. It trades about 0.19 of its potential returns per unit of risk. DATANG INTL POW is currently generating about 0.02 per unit of risk. If you would invest 2,220 in Carsales on November 7, 2024 and sell it today you would earn a total of 200.00 from holding Carsales or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Carsales vs. DATANG INTL POW
Performance |
| Timeline |
| Carsales |
| DATANG INTL POW |
Carsales and DATANG INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and DATANG INTL
The main advantage of trading using opposite Carsales and DATANG INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, DATANG INTL 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 DATANG INTL will offset losses from the drop in DATANG INTL's long position.| Carsales vs. INSURANCE AUST GRP | Carsales vs. Gaztransport Technigaz SA | Carsales vs. HANOVER INSURANCE | Carsales vs. USWE SPORTS AB |
| DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc |
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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