Correlation Between CarsalesCom and 62954WAC9

Can any of the company-specific risk be diversified away by investing in both CarsalesCom and 62954WAC9 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 62954WAC9 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 NTT 1162 03 APR 26, you can compare the effects of market volatilities on CarsalesCom and 62954WAC9 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 62954WAC9. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and 62954WAC9.

Diversification Opportunities for CarsalesCom and 62954WAC9

-0.28

Correlation Coefficient

CarsalesCom  62954WAC9

Very good diversification

The 3 months correlation between CarsalesCom and 62954WAC9 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and NTT 1162 03 APR 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT 1162 03 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 62954WAC9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT 1162 03 has no effect on the direction of CarsalesCom i.e., CarsalesCom and 62954WAC9 go up and down completely randomly.

Pair Corralation between CarsalesCom and 62954WAC9

Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to generate 1.75 times more return on investment than 62954WAC9. However, CarsalesCom is 1.75 times more volatile than NTT 1162 03 APR 26. It trades about 0.23 of its potential returns per unit of risk. NTT 1162 03 APR 26 is currently generating about -0.21 per unit of risk. If you would invest  4,840  in CarsalesCom Ltd ADR on September 15, 2024 and sell it today you would earn a total of  567.00  from holding CarsalesCom Ltd ADR or generate 11.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

CarsalesCom Ltd ADR  vs.  NTT 1162 03 APR 26

CarsalesCom ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom Ltd ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, CarsalesCom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NTT 1162 03

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTT 1162 03 APR 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NTT 1162 03 APR 26 investors.

Pair Trading with CarsalesCom and 62954WAC9

The main advantage of trading using opposite CarsalesCom and 62954WAC9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, 62954WAC9 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 62954WAC9 will offset losses from the drop in 62954WAC9's long position.

The idea behind CarsalesCom Ltd ADR and NTT 1162 03 APR 26 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.