Correlation Between TRADEDOUBLER and Carsales

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

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

Diversification Opportunities for TRADEDOUBLER and Carsales

-0.43

Correlation Coefficient

TRADEDOUBLER  Carsales

Very good diversification

The 3 months correlation between TRADEDOUBLER and Carsales is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding TRADEDOUBLER AB SK and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and TRADEDOUBLER 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 TRADEDOUBLER AB SK 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 has no effect on the direction of TRADEDOUBLER i.e., TRADEDOUBLER and Carsales go up and down completely randomly.

Pair Corralation between TRADEDOUBLER and Carsales

Assuming the 90 days horizon TRADEDOUBLER is expected to generate 1.35 times less return on investment than Carsales. In addition to that, TRADEDOUBLER is 2.44 times more volatile than CarsalesCom. It trades about 0.02 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.08 per unit of volatility. If you would invest  1,254  in CarsalesCom on December 4, 2024 and sell it today you would earn a total of  926.00  from holding CarsalesCom or generate 73.84% return on investment over 90 days.

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

TRADEDOUBLER AB SK  vs.  CarsalesCom

TRADEDOUBLER AB SK

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRADEDOUBLER AB SK are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRADEDOUBLER reported solid returns over the last few months and may actually be approaching a breakup point.

CarsalesCom

Risk-Adjusted Performance

Very Weak

Over the last 90 days CarsalesCom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TRADEDOUBLER and Carsales

The main advantage of trading using opposite TRADEDOUBLER and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEDOUBLER 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 TRADEDOUBLER AB SK and CarsalesCom 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..