Correlation Between Wstenrot Wrttembergische and CarsalesCom

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

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

Diversification Opportunities for Wstenrot Wrttembergische and CarsalesCom

0.79

Correlation Coefficient

Wstenrot Wrttembergische  CarsalesCom

Poor diversification

The 3 months correlation between Wstenrot and CarsalesCom is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Wstenrot Wrttembergische AG and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and Wstenrot Wrttembergische 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 Wstenrot Wrttembergische AG 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 has no effect on the direction of Wstenrot Wrttembergische i.e., Wstenrot Wrttembergische and CarsalesCom go up and down completely randomly.

Pair Corralation between Wstenrot Wrttembergische and CarsalesCom

Assuming the 90 days trading horizon Wstenrot Wrttembergische AG is expected to under-perform the CarsalesCom. But the stock apears to be less risky and, when comparing its historical volatility, Wstenrot Wrttembergische AG is 1.41 times less risky than CarsalesCom. The stock trades about -0.1 of its potential returns per unit of risk. The CarsalesCom is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,060  in CarsalesCom on March 26, 2025 and sell it today you would lose (40.00) from holding CarsalesCom or give up 1.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Wstenrot Wrttembergische AG  vs.  CarsalesCom

Wstenrot Wrttembergische

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wstenrot Wrttembergische AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Wstenrot Wrttembergische is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CarsalesCom

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CarsalesCom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wstenrot Wrttembergische and CarsalesCom

The main advantage of trading using opposite Wstenrot Wrttembergische and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wstenrot Wrttembergische 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 Wstenrot Wrttembergische AG 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.