Correlation Between Integral and Carsales

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

By analyzing existing cross correlation between Integral Ad Science and CarsalesCom Ltd ADR, you can compare the effects of market volatilities on Integral and Carsales 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 Integral with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and Carsales.

Diversification Opportunities for Integral and Carsales

0.65

Correlation Coefficient

Integral  Carsales

Poor diversification

The 3 months correlation between Integral and Carsales is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR and Integral 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 Integral Ad Science are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of Integral i.e., Integral and Carsales go up and down completely randomly.

Pair Corralation between Integral and Carsales

Considering the 90-day investment horizon Integral Ad Science is expected to under-perform the Carsales. But the stock apears to be less risky and, when comparing its historical volatility, Integral Ad Science is 1.51 times less risky than Carsales. The stock trades about -0.15 of its potential returns per unit of risk. The CarsalesCom Ltd ADR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,550  in CarsalesCom Ltd ADR on December 30, 2024 and sell it today you would lose (290.00) from holding CarsalesCom Ltd ADR or give up 6.37% of portfolio value over 90 days.

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

Integral Ad Science  vs.  CarsalesCom Ltd ADR

Integral Ad Science

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integral Ad Science 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 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.

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.

Pair Trading with Integral and Carsales

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

The idea behind Integral Ad Science and CarsalesCom Ltd ADR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.