Correlation Between Cartrade Tech and Total Transport

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

By analyzing existing cross correlation between Cartrade Tech Limited and Total Transport Systems, you can compare the effects of market volatilities on Cartrade Tech and Total Transport 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 Cartrade Tech with a short position of Total Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cartrade Tech and Total Transport.

Diversification Opportunities for Cartrade Tech and Total Transport

0.01

Correlation Coefficient

Cartrade Tech  Total Transport

Significant diversification

The 3 months correlation between Cartrade and Total is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cartrade Tech Limited and Total Transport Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Transport Systems and Cartrade Tech 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 Cartrade Tech Limited are associated (or correlated) with Total Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Transport Systems has no effect on the direction of Cartrade Tech i.e., Cartrade Tech and Total Transport go up and down completely randomly.

Pair Corralation between Cartrade Tech and Total Transport

Assuming the 90 days trading horizon Cartrade Tech Limited is expected to generate 0.91 times more return on investment than Total Transport. However, Cartrade Tech Limited is 1.1 times less risky than Total Transport. It trades about 0.05 of its potential returns per unit of risk. Total Transport Systems is currently generating about 0.02 per unit of risk. If you would invest  155,930  in Cartrade Tech Limited on December 25, 2024 and sell it today you would earn a total of  12,430  from holding Cartrade Tech Limited or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Cartrade Tech Limited  vs.  Total Transport Systems

Cartrade Tech Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cartrade Tech Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Cartrade Tech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Total Transport Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Total Transport Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Total Transport is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cartrade Tech and Total Transport

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

The idea behind Cartrade Tech Limited and Total Transport Systems 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.