Correlation Between CarsalesCom and Thyssenkrupp

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

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

Diversification Opportunities for CarsalesCom and Thyssenkrupp

0.51

Correlation Coefficient

CarsalesCom  Thyssenkrupp

Very weak diversification

The 3 months correlation between CarsalesCom and Thyssenkrupp is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG and CarsalesCom 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of CarsalesCom i.e., CarsalesCom and Thyssenkrupp go up and down completely randomly.

Pair Corralation between CarsalesCom and Thyssenkrupp

Assuming the 90 days horizon CarsalesCom is expected to generate 26.54 times less return on investment than Thyssenkrupp. But when comparing it to its historical volatility, CarsalesCom is 1.89 times less risky than Thyssenkrupp. It trades about 0.01 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  329.00  in thyssenkrupp AG on September 26, 2024 and sell it today you would earn a total of  59.00  from holding thyssenkrupp AG or generate 17.93% return on investment over 90 days.

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

CarsalesCom  vs.  thyssenkrupp AG

CarsalesCom

Risk-Adjusted Performance

0 of 100

Very Weak

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

thyssenkrupp AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in thyssenkrupp AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Thyssenkrupp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CarsalesCom and Thyssenkrupp

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

The idea behind CarsalesCom and thyssenkrupp AG 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.