Correlation Between Auto Trader and Quizam Media

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

By analyzing existing cross correlation between Auto Trader Group and Quizam Media, you can compare the effects of market volatilities on Auto Trader and Quizam Media 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 Auto Trader with a short position of Quizam Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Quizam Media.

Diversification Opportunities for Auto Trader and Quizam Media

0.53

Correlation Coefficient

Auto Trader  Quizam Media

Very weak diversification

The 3 months correlation between Auto and Quizam is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Quizam Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quizam Media and Auto Trader 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 Auto Trader Group are associated (or correlated) with Quizam Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quizam Media has no effect on the direction of Auto Trader i.e., Auto Trader and Quizam Media go up and down completely randomly.

Pair Corralation between Auto Trader and Quizam Media

Assuming the 90 days horizon Auto Trader Group is expected to generate 0.26 times more return on investment than Quizam Media. However, Auto Trader Group is 3.9 times less risky than Quizam Media. It trades about -0.13 of its potential returns per unit of risk. Quizam Media is currently generating about -0.12 per unit of risk. If you would invest  293.00  in Auto Trader Group on September 26, 2024 and sell it today you would lose (42.00) from holding Auto Trader Group or give up 14.33% of portfolio value over 90 days.

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

Auto Trader Group  vs.  Quizam Media

Auto Trader Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auto Trader Group 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 fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Quizam Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quizam Media 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Auto Trader and Quizam Media

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

The idea behind Auto Trader Group and Quizam Media 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.