Correlation Between MotorCycle Holdings and Carindale Property

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

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

Diversification Opportunities for MotorCycle Holdings and Carindale Property

0.53

Correlation Coefficient

MotorCycle Holdings  Carindale Property

Very weak diversification

The 3 months correlation between MotorCycle and Carindale is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MotorCycle Holdings and Carindale Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carindale Property Trust and MotorCycle Holdings 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 MotorCycle Holdings are associated (or correlated) with Carindale Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carindale Property Trust has no effect on the direction of MotorCycle Holdings i.e., MotorCycle Holdings and Carindale Property go up and down completely randomly.

Pair Corralation between MotorCycle Holdings and Carindale Property

Assuming the 90 days trading horizon MotorCycle Holdings is expected to generate 1.67 times more return on investment than Carindale Property. However, MotorCycle Holdings is 1.67 times more volatile than Carindale Property Trust. It trades about 0.12 of its potential returns per unit of risk. Carindale Property Trust is currently generating about 0.08 per unit of risk. If you would invest  165.00  in MotorCycle Holdings on October 11, 2024 and sell it today you would earn a total of  25.00  from holding MotorCycle Holdings or generate 15.15% return on investment over 90 days.

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

MotorCycle Holdings  vs.  Carindale Property Trust

MotorCycle Holdings

Risk-Adjusted Performance

9 of 100

OK

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

Carindale Property Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carindale Property Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carindale Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MotorCycle Holdings and Carindale Property

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

The idea behind MotorCycle Holdings and Carindale Property Trust 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..