Correlation Between Carsales and Genco Shipping

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Can any of the company-specific risk be diversified away by investing in both Carsales and Genco Shipping 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 Genco Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and Genco Shipping Trading, you can compare the effects of market volatilities on Carsales and Genco Shipping 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 Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Genco Shipping.

Diversification Opportunities for Carsales and Genco Shipping

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between Carsales and Genco is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of Carsales i.e., Carsales and Genco Shipping go up and down completely randomly.

Pair Corralation between Carsales and Genco Shipping

Assuming the 90 days horizon CarsalesCom is expected to generate 0.6 times more return on investment than Genco Shipping. However, CarsalesCom is 1.68 times less risky than Genco Shipping. It trades about 0.49 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.16 per unit of risk. If you would invest  2,260  in CarsalesCom on September 3, 2024 and sell it today you would earn a total of  280.00  from holding CarsalesCom or generate 12.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

CarsalesCom  vs.  Genco Shipping Trading

 Performance 
       Timeline  
CarsalesCom 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Carsales reported solid returns over the last few months and may actually be approaching a breakup point.
Genco Shipping Trading 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genco Shipping is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Carsales and Genco Shipping Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Carsales and Genco Shipping

The main advantage of trading using opposite Carsales and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Genco Shipping 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 Genco Shipping will offset losses from the drop in Genco Shipping's long position.
The idea behind CarsalesCom and Genco Shipping Trading 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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