What is CAR Analysis and Why It Matters for ASX Companies
Last updated 14 Mar 2026·2 min read
What is CAR Analysis and Why It Matters for ASX Companies
Cumulative Abnormal Returns (CAR) analysis is one of the most powerful tools available to listed companies for detecting unusual trading activity in the lead-up to price-sensitive announcements. In this post, we break down what CAR analysis is, how it works, and why every ASX-listed company should be monitoring it.
What are Cumulative Abnormal Returns?
Abnormal returns measure the difference between a stock’s actual return and its expected return over a given period. When we accumulate these differences over multiple days leading up to an announcement, we get Cumulative Abnormal Returns — a metric that reveals whether informed trading may have occurred before the market was officially notified.
ASIC and ASX use CAR analysis as part of their surveillance frameworks. If your company shows statistically significant abnormal returns before an announcement, it could trigger a “please explain” query — or worse, a formal investigation.
Key takeaway: CAR analysis isn’t just an academic exercise. It’s the same methodology regulators use to flag potential insider trading. Having your own CAR data means you can respond proactively, not reactively.
How ASIC uses CAR in enforcement
ASIC publishes annual market integrity reports that include aggregate CAR data across the ASX. Their analysis looks at the 10 trading days prior to material announcements and measures whether abnormal price movements occurred.
In their most recent report, ASIC found that approximately 7.2% of material announcements showed statistically significant pre-announcement price movements. While not all of these indicate insider trading, each one represents a potential compliance risk for the company involved.
Building CAR monitoring into your workflow
The best approach is continuous monitoring. Rather than running CAR analysis after a “please explain” arrives, companies should be tracking their own abnormal returns in real-time. This gives you:
- Early warning — Know about unusual activity before the regulator does
- Better board reporting — Present compliance data alongside market intelligence
- Defensible records — Demonstrate to regulators that you actively monitor trading patterns
Quarterback’s 2026 Intelligence Update includes built-in CAR analysis for every announcement. It runs automatically, benchmarks against sector norms, and flags anything that needs attention — so your compliance team can focus on action, not analysis.