Correlation Between CORNISH METALS and CARSALES

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

By analyzing existing cross correlation between CORNISH METALS INC and CARSALESCOM, you can compare the effects of market volatilities on CORNISH METALS 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 CORNISH METALS with a short position of CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CORNISH METALS and CARSALES.

Diversification Opportunities for CORNISH METALS and CARSALES

0.67

Correlation Coefficient

CORNISH METALS  CARSALES

Poor diversification

The 3 months correlation between CORNISH and CARSALES is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CORNISH METALS INC and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and CORNISH METALS 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 CORNISH METALS INC 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 CORNISH METALS i.e., CORNISH METALS and CARSALES go up and down completely randomly.

Pair Corralation between CORNISH METALS and CARSALES

Assuming the 90 days trading horizon CORNISH METALS INC is expected to generate 2.15 times more return on investment than CARSALES. However, CORNISH METALS is 2.15 times more volatile than CARSALESCOM. It trades about 0.08 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.11 per unit of risk. If you would invest  7.45  in CORNISH METALS INC on April 24, 2025 and sell it today you would earn a total of  1.15  from holding CORNISH METALS INC or generate 15.44% return on investment over 90 days.

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

CORNISH METALS INC  vs.  CARSALESCOM

CORNISH METALS INC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CORNISH METALS INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CORNISH METALS reported solid returns over the last few months and may actually be approaching a breakup point.

CARSALESCOM

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CARSALESCOM are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CARSALES may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CORNISH METALS and CARSALES

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

The idea behind CORNISH METALS INC 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.