Correlation Between Imageware Sys and Carsmartt

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

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

Diversification Opportunities for Imageware Sys and Carsmartt

0.0

Correlation Coefficient

Imageware Sys  Carsmartt

Pay attention - limited upside

The 3 months correlation between Imageware and Carsmartt is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Imageware Sys and Carsmartt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsmartt and Imageware Sys 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 Imageware Sys 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 Imageware Sys i.e., Imageware Sys and Carsmartt go up and down completely randomly.

Pair Corralation between Imageware Sys and Carsmartt

If you would invest  0.13  in Carsmartt on December 4, 2024 and sell it today you would earn a total of  0.03  from holding Carsmartt or generate 23.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Imageware Sys  vs.  Carsmartt

Imageware Sys

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imageware Sys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Imageware Sys is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Carsmartt

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carsmartt are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Carsmartt displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imageware Sys and Carsmartt

The main advantage of trading using opposite Imageware Sys and Carsmartt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imageware Sys 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 Imageware Sys 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.