Correlation Between Automobile and INNOX Advanced
Can any of the company-specific risk be diversified away by investing in both Automobile and INNOX Advanced 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 Automobile and INNOX Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and INNOX Advanced Materials, you can compare the effects of market volatilities on Automobile and INNOX Advanced 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 Automobile with a short position of INNOX Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and INNOX Advanced.
Diversification Opportunities for Automobile and INNOX Advanced
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Automobile and INNOX is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials and Automobile 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 Automobile Pc are associated (or correlated) with INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of Automobile i.e., Automobile and INNOX Advanced go up and down completely randomly.
Pair Corralation between Automobile and INNOX Advanced
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the INNOX Advanced. In addition to that, Automobile is 1.16 times more volatile than INNOX Advanced Materials. It trades about -0.04 of its total potential returns per unit of risk. INNOX Advanced Materials is currently generating about 0.0 per unit of volatility. If you would invest 3,384,650 in INNOX Advanced Materials on October 30, 2024 and sell it today you would lose (609,650) from holding INNOX Advanced Materials or give up 18.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. INNOX Advanced Materials
Performance |
| Timeline |
| Automobile Pc |
| INNOX Advanced Materials |
Automobile and INNOX Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and INNOX Advanced
The main advantage of trading using opposite Automobile and INNOX Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, INNOX Advanced 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 INNOX Advanced will offset losses from the drop in INNOX Advanced's long position.| Automobile vs. Hana Materials | Automobile vs. Hyosung Advanced Materials | Automobile vs. INNOX Advanced Materials | Automobile vs. Chorokbaem Healthcare Co |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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