Correlation Between Freight Technologies and Carsmartt

Can any of the company-specific risk be diversified away by investing in both Freight Technologies and Carsmartt 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 Freight Technologies and Carsmartt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Freight Technologies and Carsmartt, you can compare the effects of market volatilities on Freight Technologies and Carsmartt 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 Freight Technologies with a short position of Carsmartt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freight Technologies and Carsmartt.

Diversification Opportunities for Freight Technologies and Carsmartt

0.62

Correlation Coefficient

Freight Technologies  Carsmartt

Poor diversification

The 3 months correlation between Freight and Carsmartt is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Freight Technologies and Carsmartt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsmartt and Freight Technologies 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 Freight Technologies are associated (or correlated) with Carsmartt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsmartt has no effect on the direction of Freight Technologies i.e., Freight Technologies and Carsmartt go up and down completely randomly.

Pair Corralation between Freight Technologies and Carsmartt

Given the investment horizon of 90 days Freight Technologies is expected to under-perform the Carsmartt. But the stock apears to be less risky and, when comparing its historical volatility, Freight Technologies is 1.22 times less risky than Carsmartt. The stock trades about -0.07 of its potential returns per unit of risk. The Carsmartt is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  0.19  in Carsmartt on September 14, 2024 and sell it today you would lose (0.07) from holding Carsmartt or give up 36.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Freight Technologies  vs.  Carsmartt

Freight Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Carsmartt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carsmartt has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Freight Technologies and Carsmartt

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

The idea behind Freight Technologies and Carsmartt 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.