Correlation Between CarsalesCom and Celestica

Can any of the company-specific risk be diversified away by investing in both CarsalesCom and Celestica 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 CarsalesCom and Celestica 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 Celestica, you can compare the effects of market volatilities on CarsalesCom and Celestica 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 CarsalesCom with a short position of Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Celestica.

Diversification Opportunities for CarsalesCom and Celestica

0.17

Correlation Coefficient

CarsalesCom  Celestica

Average diversification

The 3 months correlation between CarsalesCom and Celestica is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and CarsalesCom 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of CarsalesCom i.e., CarsalesCom and Celestica go up and down completely randomly.

Pair Corralation between CarsalesCom and Celestica

Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to under-perform the Celestica. In addition to that, CarsalesCom is 1.19 times more volatile than Celestica. It trades about -0.22 of its total potential returns per unit of risk. Celestica is currently generating about 0.26 per unit of volatility. If you would invest  8,800  in Celestica on October 11, 2024 and sell it today you would earn a total of  1,447  from holding Celestica or generate 16.44% return on investment over 90 days.

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

CarsalesCom Ltd ADR  vs.  Celestica

CarsalesCom ADR

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, CarsalesCom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Celestica

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CarsalesCom and Celestica

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

The idea behind CarsalesCom Ltd ADR and Celestica 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.