Correlation Between HELIOS TECHS and Carsales

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

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

Diversification Opportunities for HELIOS TECHS and Carsales

0.77

Correlation Coefficient

HELIOS TECHS  Carsales

Poor diversification

The 3 months correlation between HELIOS and Carsales is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding HELIOS TECHS INC and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales and HELIOS TECHS 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 HELIOS TECHS INC 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 Carsales has no effect on the direction of HELIOS TECHS i.e., HELIOS TECHS and Carsales go up and down completely randomly.

Pair Corralation between HELIOS TECHS and Carsales

Assuming the 90 days horizon HELIOS TECHS INC is expected to under-perform the Carsales. In addition to that, HELIOS TECHS is 1.67 times more volatile than Carsales. It trades about -0.02 of its total potential returns per unit of risk. Carsales is currently generating about 0.08 per unit of volatility. If you would invest  1,367  in Carsales on October 4, 2024 and sell it today you would earn a total of  813.00  from holding Carsales or generate 59.47% return on investment over 90 days.

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

HELIOS TECHS INC  vs.  Carsales

HELIOS TECHS INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HELIOS TECHS INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HELIOS TECHS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Carsales

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carsales has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Carsales 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 HELIOS TECHS and Carsales

The main advantage of trading using opposite HELIOS TECHS and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HELIOS TECHS 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 HELIOS TECHS INC and Carsales 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.