Correlation Between Iridium Communications and INTER CARS
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and INTER CARS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and INTER CARS SA, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and INTER CARS.
Diversification Opportunities for Iridium Communications and INTER CARS
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iridium and INTER is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications 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 Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and INTER CARS go up and down completely randomly.
Pair Corralation between Iridium Communications and INTER CARS
Assuming the 90 days horizon Iridium Communications is expected to under-perform the INTER CARS. In addition to that, Iridium Communications is 1.13 times more volatile than INTER CARS SA. It trades about -0.05 of its total potential returns per unit of risk. INTER CARS SA is currently generating about 0.02 per unit of volatility. If you would invest 9,960 in INTER CARS SA on August 27, 2024 and sell it today you would earn a total of 1,100 from holding INTER CARS SA or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. INTER CARS SA
Performance |
| Timeline |
| Iridium Communications |
| INTER CARS SA |
Iridium Communications and INTER CARS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and INTER CARS
The main advantage of trading using opposite Iridium Communications and INTER CARS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. CONAGRA FOODS | Iridium Communications vs. EHEALTH | Iridium Communications vs. SENECA FOODS A | Iridium Communications vs. TYSON FOODS A |
| INTER CARS vs. Superior Plus Corp | INTER CARS vs. NMI Holdings | INTER CARS vs. Origin Agritech | INTER CARS vs. SIVERS SEMICONDUCTORS AB |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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