Correlation Between Carsales and Peninsula Energy
Can any of the company-specific risk be diversified away by investing in both Carsales and Peninsula Energy 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 Peninsula Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Peninsula Energy Limited, you can compare the effects of market volatilities on Carsales and Peninsula Energy 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 Peninsula Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Peninsula Energy.
Diversification Opportunities for Carsales and Peninsula Energy
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carsales and Peninsula is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and Peninsula Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Energy 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 Peninsula Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Energy has no effect on the direction of Carsales i.e., Carsales and Peninsula Energy go up and down completely randomly.
Pair Corralation between Carsales and Peninsula Energy
Assuming the 90 days trading horizon Carsales is expected to generate 0.23 times more return on investment than Peninsula Energy. However, Carsales is 4.42 times less risky than Peninsula Energy. It trades about 0.06 of its potential returns per unit of risk. Peninsula Energy Limited is currently generating about 0.0 per unit of risk. If you would invest 1,953 in Carsales on November 8, 2024 and sell it today you would earn a total of 467.00 from holding Carsales or generate 23.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Carsales vs. Peninsula Energy Limited
Performance |
| Timeline |
| Carsales |
| Peninsula Energy |
Carsales and Peninsula Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Peninsula Energy
The main advantage of trading using opposite Carsales and Peninsula Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Peninsula Energy 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 Peninsula Energy will offset losses from the drop in Peninsula Energy's long position.| Carsales vs. Apollo Investment Corp | Carsales vs. PennantPark Investment | Carsales vs. Chuangs China Investments | Carsales vs. HK Electric Investments |
| Peninsula Energy vs. Nishi Nippon Railroad Co | Peninsula Energy vs. ATRESMEDIA | Peninsula Energy vs. SQUIRREL MEDIA SA | Peninsula Energy vs. EVS Broadcast Equipment |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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