Correlation Between Carsales and WiMi Hologram

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

Diversification Opportunities for Carsales and WiMi Hologram

-0.43

Correlation Coefficient

Carsales  WiMi Hologram

Very good diversification

The 3 months correlation between Carsales and WiMi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and WiMi Hologram Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiMi Hologram Cloud 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 WiMi Hologram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiMi Hologram Cloud has no effect on the direction of Carsales i.e., Carsales and WiMi Hologram go up and down completely randomly.

Pair Corralation between Carsales and WiMi Hologram

Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to under-perform the WiMi Hologram. But the pink sheet apears to be less risky and, when comparing its historical volatility, CarsalesCom Ltd ADR is 6.56 times less risky than WiMi Hologram. The pink sheet trades about -0.07 of its potential returns per unit of risk. The WiMi Hologram Cloud is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  86.00  in WiMi Hologram Cloud on December 3, 2024 and sell it today you would lose (8.00) from holding WiMi Hologram Cloud or give up 9.3% of portfolio value over 90 days.

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

CarsalesCom Ltd ADR  vs.  WiMi Hologram Cloud

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.

WiMi Hologram Cloud

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WiMi Hologram Cloud are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak primary indicators, WiMi Hologram demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carsales and WiMi Hologram

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

The idea behind CarsalesCom Ltd ADR and WiMi Hologram Cloud 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.