Correlation Between HF SINCLAIR and Carsales

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

By analyzing existing cross correlation between HF SINCLAIR P and CarsalesCom, you can compare the effects of market volatilities on HF SINCLAIR 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 HF SINCLAIR with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF SINCLAIR and Carsales.

Diversification Opportunities for HF SINCLAIR and Carsales

-0.23

Correlation Coefficient

HF SINCLAIR  Carsales

Very good diversification

The 3 months correlation between HL80 and Carsales is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding HF SINCLAIR P and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and HF SINCLAIR 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 HF SINCLAIR P 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 HF SINCLAIR i.e., HF SINCLAIR and Carsales go up and down completely randomly.

Pair Corralation between HF SINCLAIR and Carsales

Assuming the 90 days trading horizon HF SINCLAIR is expected to generate 1.14 times less return on investment than Carsales. In addition to that, HF SINCLAIR is 1.25 times more volatile than CarsalesCom. It trades about 0.35 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.5 per unit of volatility. If you would invest  2,260  in CarsalesCom on September 5, 2024 and sell it today you would earn a total of  300.00  from holding CarsalesCom or generate 13.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

HF SINCLAIR P  vs.  CarsalesCom

HF SINCLAIR P

Risk-Adjusted Performance

0 of 100

Very Weak

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

CarsalesCom

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Carsales reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HF SINCLAIR and Carsales

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

The idea behind HF SINCLAIR P 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.