Correlation Between CarsalesCom and Joint Stock

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

Diversification Opportunities for CarsalesCom and Joint Stock

0.0

Correlation Coefficient

CarsalesCom  Joint Stock

Pay attention - limited upside

The 3 months correlation between CarsalesCom and Joint is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of CarsalesCom i.e., CarsalesCom and Joint Stock go up and down completely randomly.

Pair Corralation between CarsalesCom and Joint Stock

Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to generate 0.88 times more return on investment than Joint Stock. However, CarsalesCom Ltd ADR is 1.13 times less risky than Joint Stock. It trades about 0.08 of its potential returns per unit of risk. Joint Stock is currently generating about -0.06 per unit of risk. If you would invest  4,902  in CarsalesCom Ltd ADR on September 4, 2024 and sell it today you would earn a total of  597.00  from holding CarsalesCom Ltd ADR or generate 12.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CarsalesCom Ltd ADR  vs.  Joint Stock

CarsalesCom ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom Ltd ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, CarsalesCom showed solid returns over the last few months and may actually be approaching a breakup point.

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CarsalesCom and Joint Stock

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

The idea behind CarsalesCom Ltd ADR and Joint Stock 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.