Correlation Between Astar and Mister Car

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

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

Diversification Opportunities for Astar and Mister Car

0.56

Correlation Coefficient

Astar  Mister Car

Very weak diversification

The 3 months correlation between Astar and Mister is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Mister Car Wash, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mister Car Wash, and Astar 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 Astar are associated (or correlated) with Mister Car. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mister Car Wash, has no effect on the direction of Astar i.e., Astar and Mister Car go up and down completely randomly.

Pair Corralation between Astar and Mister Car

Assuming the 90 days trading horizon Astar is expected to generate 3.0 times more return on investment than Mister Car. However, Astar is 3.0 times more volatile than Mister Car Wash,. It trades about 0.05 of its potential returns per unit of risk. Mister Car Wash, is currently generating about -0.01 per unit of risk. If you would invest  4.41  in Astar on October 10, 2024 and sell it today you would earn a total of  1.73  from holding Astar or generate 39.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	60.0%
Values	Daily Returns

Astar  vs.  Mister Car Wash,

Astar

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mister Car Wash,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mister Car Wash, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Mister Car may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Astar and Mister Car

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

The idea behind Astar and Mister Car Wash, 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.