Correlation Between SOGECLAIR and Carsales

Can any of the company-specific risk be diversified away by investing in both SOGECLAIR and Carsales 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 SOGECLAIR and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOGECLAIR SA INH and Carsales, you can compare the effects of market volatilities on SOGECLAIR and Carsales 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 SOGECLAIR with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOGECLAIR and Carsales.

Diversification Opportunities for SOGECLAIR and Carsales

0.07

Correlation Coefficient

SOGECLAIR  Carsales

Significant diversification

The 3 months correlation between SOGECLAIR and Carsales is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SOGECLAIR SA INH and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales and SOGECLAIR 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 SOGECLAIR SA INH are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of SOGECLAIR i.e., SOGECLAIR and Carsales go up and down completely randomly.

Pair Corralation between SOGECLAIR and Carsales

Assuming the 90 days horizon SOGECLAIR SA INH is expected to under-perform the Carsales. In addition to that, SOGECLAIR is 1.44 times more volatile than Carsales. It trades about -0.01 of its total potential returns per unit of risk. Carsales is currently generating about 0.05 per unit of volatility. If you would invest  2,064  in Carsales on September 29, 2024 and sell it today you would earn a total of  176.00  from holding Carsales or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SOGECLAIR SA INH  vs.  Carsales

SOGECLAIR SA INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOGECLAIR SA INH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Carsales

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carsales has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Carsales is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SOGECLAIR and Carsales

The main advantage of trading using opposite SOGECLAIR and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOGECLAIR position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.

The idea behind SOGECLAIR SA INH and Carsales 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.