Correlation Between Uber Technologies and CarsalesCom

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

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

Diversification Opportunities for Uber Technologies and CarsalesCom

-0.44

Correlation Coefficient

Uber Technologies  CarsalesCom

Very good diversification

The 3 months correlation between Uber and CarsalesCom is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR and Uber Technologies 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 Uber Technologies are associated (or correlated) with CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of Uber Technologies i.e., Uber Technologies and CarsalesCom go up and down completely randomly.

Pair Corralation between Uber Technologies and CarsalesCom

Given the investment horizon of 90 days Uber Technologies is expected to under-perform the CarsalesCom. In addition to that, Uber Technologies is 1.12 times more volatile than CarsalesCom Ltd ADR. It trades about -0.08 of its total potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about 0.08 per unit of volatility. If you would invest  4,851  in CarsalesCom Ltd ADR on September 13, 2024 and sell it today you would earn a total of  556.00  from holding CarsalesCom Ltd ADR or generate 11.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Uber Technologies  vs.  CarsalesCom Ltd ADR

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

CarsalesCom ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom Ltd ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, CarsalesCom showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uber Technologies and CarsalesCom

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

The idea behind Uber Technologies and CarsalesCom Ltd ADR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.