Correlation Between CARSALES and REGAL ASIAN

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

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

Diversification Opportunities for CARSALES and REGAL ASIAN

0.09

Correlation Coefficient

CARSALES  REGAL ASIAN

Significant diversification

The 3 months correlation between CARSALES and REGAL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS and CARSALES 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 CARSALESCOM are associated (or correlated) with REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of CARSALES i.e., CARSALES and REGAL ASIAN go up and down completely randomly.

Pair Corralation between CARSALES and REGAL ASIAN

Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.88 times more return on investment than REGAL ASIAN. However, CARSALESCOM is 1.13 times less risky than REGAL ASIAN. It trades about 0.03 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about 0.0 per unit of risk. If you would invest  2,064  in CARSALESCOM on October 4, 2024 and sell it today you would earn a total of  116.00  from holding CARSALESCOM or generate 5.62% return on investment over 90 days.

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

CARSALESCOM  vs.  REGAL ASIAN INVESTMENTS

CARSALESCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CARSALES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CARSALES and REGAL ASIAN

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

The idea behind CARSALESCOM and REGAL ASIAN INVESTMENTS 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 Transaction History module to view history of all your transactions and understand their impact on performance.