Correlation Between Pandora AS and CARSALESCOM

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Can any of the company-specific risk be diversified away by investing in both Pandora AS and CARSALESCOM 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 Pandora AS and CARSALESCOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pandora AS and CARSALESCOM, you can compare the effects of market volatilities on Pandora AS and CARSALESCOM 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 Pandora AS with a short position of CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pandora AS and CARSALESCOM.

Diversification Opportunities for Pandora AS and CARSALESCOM

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Pandora and CARSALESCOM is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pandora AS and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and Pandora AS 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 Pandora AS are associated (or correlated) with CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Pandora AS i.e., Pandora AS and CARSALESCOM go up and down completely randomly.

Pair Corralation between Pandora AS and CARSALESCOM

Assuming the 90 days horizon Pandora AS is expected to generate 1.23 times more return on investment than CARSALESCOM. However, Pandora AS is 1.23 times more volatile than CARSALESCOM. It trades about 0.18 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.0 per unit of risk. If you would invest  14,320  in Pandora AS on October 10, 2024 and sell it today you would earn a total of  3,070  from holding Pandora AS or generate 21.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.33%
ValuesDaily Returns

Pandora AS  vs.  CARSALESCOM

 Performance 
       Timeline  
Pandora AS 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pandora AS reported solid returns over the last few months and may actually be approaching a breakup point.
CARSALESCOM 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pandora AS and CARSALESCOM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pandora AS and CARSALESCOM

The main advantage of trading using opposite Pandora AS and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pandora AS position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM's long position.
The idea behind Pandora AS and CARSALESCOM 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.
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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