Correlation Between CarsalesCom and ALEFARM BREWING

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

By analyzing existing cross correlation between CarsalesCom and ALEFARM BREWING DK 05, you can compare the effects of market volatilities on CarsalesCom and ALEFARM BREWING 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 ALEFARM BREWING. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and ALEFARM BREWING.

Diversification Opportunities for CarsalesCom and ALEFARM BREWING

-0.41

Correlation Coefficient

CarsalesCom  ALEFARM BREWING

Very good diversification

The 3 months correlation between CarsalesCom and ALEFARM is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and ALEFARM BREWING DK 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEFARM BREWING DK 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 ALEFARM BREWING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEFARM BREWING DK has no effect on the direction of CarsalesCom i.e., CarsalesCom and ALEFARM BREWING go up and down completely randomly.

Pair Corralation between CarsalesCom and ALEFARM BREWING

Assuming the 90 days horizon CarsalesCom is expected to generate 0.36 times more return on investment than ALEFARM BREWING. However, CarsalesCom is 2.76 times less risky than ALEFARM BREWING. It trades about 0.12 of its potential returns per unit of risk. ALEFARM BREWING DK 05 is currently generating about -0.01 per unit of risk. If you would invest  1,830  in CarsalesCom on April 24, 2025 and sell it today you would earn a total of  230.00  from holding CarsalesCom or generate 12.57% return on investment over 90 days.

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

CarsalesCom  vs.  ALEFARM BREWING DK 05

CarsalesCom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CarsalesCom reported solid returns over the last few months and may actually be approaching a breakup point.

ALEFARM BREWING DK

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ALEFARM BREWING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CarsalesCom and ALEFARM BREWING

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

The idea behind CarsalesCom and ALEFARM BREWING DK 05 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.