Correlation Between Carsales and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both Carsales and Delta Electronics 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 Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Delta Electronics Public, you can compare the effects of market volatilities on Carsales and Delta Electronics 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 Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Delta Electronics.
Diversification Opportunities for Carsales and Delta Electronics
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Carsales and Delta is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of Carsales i.e., Carsales and Delta Electronics go up and down completely randomly.
Pair Corralation between Carsales and Delta Electronics
Assuming the 90 days trading horizon Carsales is expected to generate 0.54 times more return on investment than Delta Electronics. However, Carsales is 1.86 times less risky than Delta Electronics. It trades about 0.03 of its potential returns per unit of risk. Delta Electronics Public is currently generating about -0.05 per unit of risk. If you would invest 2,360 in Carsales on November 6, 2024 and sell it today you would earn a total of 60.00 from holding Carsales or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. Delta Electronics Public
Performance |
| Timeline |
| Carsales |
| Delta Electronics Public |
Carsales and Delta Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Delta Electronics
The main advantage of trading using opposite Carsales and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Delta Electronics 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 Delta Electronics will offset losses from the drop in Delta Electronics' long position.| Carsales vs. PLANT VEDA FOODS | Carsales vs. Molson Coors Beverage | Carsales vs. Moneysupermarket Group PLC | Carsales vs. VARIOUS EATERIES LS |
| Delta Electronics vs. CVB Financial Corp | Delta Electronics vs. CHIBA BANK | Delta Electronics vs. Synovus Financial Corp | Delta Electronics vs. Direct Line Insurance |
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 CEOs Directory module to screen CEOs from public companies around the world.
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