Correlation Between Carsales and QuinStreet

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

Diversification Opportunities for Carsales and QuinStreet

0.4

Correlation Coefficient

Carsales  QuinStreet

Very weak diversification

The 3 months correlation between Carsales and QuinStreet is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and QuinStreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuinStreet 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 QuinStreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuinStreet has no effect on the direction of Carsales i.e., Carsales and QuinStreet go up and down completely randomly.

Pair Corralation between Carsales and QuinStreet

Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to generate 1.3 times more return on investment than QuinStreet. However, Carsales is 1.3 times more volatile than QuinStreet. It trades about -0.01 of its potential returns per unit of risk. QuinStreet is currently generating about -0.13 per unit of risk. If you would invest  4,497  in CarsalesCom Ltd ADR on December 24, 2024 and sell it today you would lose (227.00) from holding CarsalesCom Ltd ADR or give up 5.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CarsalesCom Ltd ADR  vs.  QuinStreet

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

QuinStreet

Risk-Adjusted Performance

Very Weak

Over the last 90 days QuinStreet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Carsales and QuinStreet

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

The idea behind CarsalesCom Ltd ADR and QuinStreet 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.