Correlation Between Lookers Plc and Consumer Automotive

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

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

Diversification Opportunities for Lookers Plc and Consumer Automotive

0.0

Correlation Coefficient

Lookers Plc  Consumer Automotive

Pay attention - limited upside

The 3 months correlation between Lookers and Consumer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lookers Plc and Consumer Automotive Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Automotive and Lookers Plc 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 Lookers Plc are associated (or correlated) with Consumer Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Automotive has no effect on the direction of Lookers Plc i.e., Lookers Plc and Consumer Automotive go up and down completely randomly.

Pair Corralation between Lookers Plc and Consumer Automotive

If you would invest  0.01  in Consumer Automotive Finance on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Consumer Automotive Finance or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Lookers Plc  vs.  Consumer Automotive Finance

Lookers Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lookers Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lookers Plc is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Consumer Automotive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consumer Automotive Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Consumer Automotive is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lookers Plc and Consumer Automotive

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

The idea behind Lookers Plc and Consumer Automotive Finance 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.