Correlation Between COMBA TELECOM and CARSALES

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

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

Diversification Opportunities for COMBA TELECOM and CARSALES

-0.7

Correlation Coefficient

COMBA TELECOM  CARSALES

Excellent diversification

The 3 months correlation between COMBA and CARSALES is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding COMBA TELECOM SYST and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and COMBA TELECOM 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 COMBA TELECOM SYST 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 COMBA TELECOM i.e., COMBA TELECOM and CARSALES go up and down completely randomly.

Pair Corralation between COMBA TELECOM and CARSALES

Assuming the 90 days trading horizon COMBA TELECOM SYST is expected to under-perform the CARSALES. In addition to that, COMBA TELECOM is 1.18 times more volatile than CARSALESCOM. It trades about -0.07 of its total potential returns per unit of risk. CARSALESCOM is currently generating about 0.16 per unit of volatility. If you would invest  2,241  in CARSALESCOM on September 3, 2024 and sell it today you would earn a total of  319.00  from holding CARSALESCOM or generate 14.23% return on investment over 90 days.

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

COMBA TELECOM SYST  vs.  CARSALESCOM

COMBA TELECOM SYST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMBA TELECOM SYST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CARSALESCOM

Risk-Adjusted Performance

12 of 100

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. In spite of rather uncertain basic indicators, CARSALES exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMBA TELECOM and CARSALES

The main advantage of trading using opposite COMBA TELECOM and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMBA TELECOM 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's long position.

The idea behind COMBA TELECOM SYST 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.