Correlation Between Major Drilling and INTER CARS
Can any of the company-specific risk be diversified away by investing in both Major Drilling and INTER CARS 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 Major Drilling and INTER CARS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and INTER CARS SA, you can compare the effects of market volatilities on Major Drilling and INTER CARS 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 Major Drilling with a short position of INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and INTER CARS.
Diversification Opportunities for Major Drilling and INTER CARS
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Major and INTER is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA and Major Drilling 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 Major Drilling Group are associated (or correlated) with INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of Major Drilling i.e., Major Drilling and INTER CARS go up and down completely randomly.
Pair Corralation between Major Drilling and INTER CARS
Assuming the 90 days horizon Major Drilling Group is expected to under-perform the INTER CARS. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 1.04 times less risky than INTER CARS. The stock trades about -0.18 of its potential returns per unit of risk. The INTER CARS SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 11,760 in INTER CARS SA on October 13, 2024 and sell it today you would earn a total of 580.00 from holding INTER CARS SA or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. INTER CARS SA
Performance |
| Timeline |
| Major Drilling Group |
| INTER CARS SA |
Major Drilling and INTER CARS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and INTER CARS
The main advantage of trading using opposite Major Drilling and INTER CARS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, INTER CARS 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 INTER CARS will offset losses from the drop in INTER CARS's long position.| Major Drilling vs. OFFICE DEPOT | Major Drilling vs. RYU Apparel | Major Drilling vs. VITEC SOFTWARE GROUP | Major Drilling vs. KENEDIX OFFICE INV |
| INTER CARS vs. Choice Hotels International | INTER CARS vs. PRECISION DRILLING P | INTER CARS vs. SOUTHWEST AIRLINES | INTER CARS vs. Major Drilling Group |
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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