Correlation Between CARSALES and CEZ A

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

By analyzing existing cross correlation between CARSALESCOM and CEZ a s, you can compare the effects of market volatilities on CARSALES and CEZ A 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 CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and CEZ A.

Diversification Opportunities for CARSALES and CEZ A

-0.18

Correlation Coefficient

CARSALES  CEZ A

Good diversification

The 3 months correlation between CARSALES and CEZ is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s 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 CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of CARSALES i.e., CARSALES and CEZ A go up and down completely randomly.

Pair Corralation between CARSALES and CEZ A

Assuming the 90 days trading horizon CARSALESCOM is expected to under-perform the CEZ A. In addition to that, CARSALES is 1.27 times more volatile than CEZ a s. It trades about -0.13 of its total potential returns per unit of risk. CEZ a s is currently generating about 0.12 per unit of volatility. If you would invest  3,856  in CEZ a s on December 22, 2024 and sell it today you would earn a total of  398.00  from holding CEZ a s or generate 10.32% return on investment over 90 days.

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

CARSALESCOM  vs.  CEZ a s

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CEZ a s

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ a s are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CEZ A may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CARSALES and CEZ A

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

The idea behind CARSALESCOM and CEZ a s 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.