Correlation Between Carsales and Allient

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

By analyzing existing cross correlation between CarsalesCom Ltd ADR and Allient, you can compare the effects of market volatilities on Carsales and Allient 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 Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Allient.

Diversification Opportunities for Carsales and Allient

0.21

Correlation Coefficient

Carsales  Allient

Modest diversification

The 3 months correlation between Carsales and Allient is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 CarsalesCom Ltd ADR are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Carsales i.e., Carsales and Allient go up and down completely randomly.

Pair Corralation between Carsales and Allient

Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to generate 0.77 times more return on investment than Allient. However, CarsalesCom Ltd ADR is 1.29 times less risky than Allient. It trades about 0.07 of its potential returns per unit of risk. Allient is currently generating about -0.08 per unit of risk. If you would invest  4,550  in CarsalesCom Ltd ADR on December 4, 2024 and sell it today you would earn a total of  115.00  from holding CarsalesCom Ltd ADR or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

CarsalesCom Ltd ADR  vs.  Allient

CarsalesCom ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CarsalesCom Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Allient

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Carsales and Allient

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

The idea behind CarsalesCom Ltd ADR and Allient 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.