Correlation Between Automobile and Innometry
Can any of the company-specific risk be diversified away by investing in both Automobile and Innometry 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 Innometry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Innometry Co, you can compare the effects of market volatilities on Automobile and Innometry 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 Innometry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Innometry.
Diversification Opportunities for Automobile and Innometry
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automobile and Innometry is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Innometry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innometry 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 Innometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innometry has no effect on the direction of Automobile i.e., Automobile and Innometry go up and down completely randomly.
Pair Corralation between Automobile and Innometry
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Innometry. In addition to that, Automobile is 1.04 times more volatile than Innometry Co. It trades about -0.07 of its total potential returns per unit of risk. Innometry Co is currently generating about -0.03 per unit of volatility. If you would invest 1,011,000 in Innometry Co on November 3, 2024 and sell it today you would lose (289,000) from holding Innometry Co or give up 28.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Innometry Co
Performance |
| Timeline |
| Automobile Pc |
| Innometry |
Automobile and Innometry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Innometry
The main advantage of trading using opposite Automobile and Innometry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Innometry 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 Innometry will offset losses from the drop in Innometry's long position.| Automobile vs. Duksan Hi Metal | Automobile vs. Daejung Chemicals Metals | Automobile vs. iNtRON Biotechnology | Automobile vs. Eagon Industrial Co |
| Innometry vs. Hanjoo Light Metal | Innometry vs. Dongbang Transport Logistics | Innometry vs. Hannong Chemicals | Innometry vs. ECSTELECOM Co |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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