Correlation Between Carsales and Quizam Media

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

Diversification Opportunities for Carsales and Quizam Media

0.08

Correlation Coefficient

Carsales  Quizam Media

Significant diversification

The 3 months correlation between Carsales and Quizam is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Quizam Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quizam Media 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 Quizam Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quizam Media has no effect on the direction of Carsales i.e., Carsales and Quizam Media go up and down completely randomly.

Pair Corralation between Carsales and Quizam Media

Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to under-perform the Quizam Media. But the pink sheet apears to be less risky and, when comparing its historical volatility, CarsalesCom Ltd ADR is 7.21 times less risky than Quizam Media. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Quizam Media is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.74  in Quizam Media on December 2, 2024 and sell it today you would earn a total of  1.88  from holding Quizam Media or generate 108.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

CarsalesCom Ltd ADR  vs.  Quizam Media

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 latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Quizam Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quizam Media are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Quizam Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carsales and Quizam Media

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

The idea behind CarsalesCom Ltd ADR and Quizam Media 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.