Correlation Between INTER CARS and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both INTER CARS and Gamma Communications 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 INTER CARS and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and Gamma Communications plc, you can compare the effects of market volatilities on INTER CARS and Gamma Communications 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 INTER CARS with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Gamma Communications.
Diversification Opportunities for INTER CARS and Gamma Communications
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INTER and Gamma is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc and INTER CARS 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 INTER CARS SA are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of INTER CARS i.e., INTER CARS and Gamma Communications go up and down completely randomly.
Pair Corralation between INTER CARS and Gamma Communications
Assuming the 90 days horizon INTER CARS SA is expected to generate 1.03 times more return on investment than Gamma Communications. However, INTER CARS is 1.03 times more volatile than Gamma Communications plc. It trades about -0.06 of its potential returns per unit of risk. Gamma Communications plc is currently generating about -0.1 per unit of risk. If you would invest 13,300 in INTER CARS SA on January 16, 2025 and sell it today you would lose (1,280) from holding INTER CARS SA or give up 9.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. Gamma Communications plc
Performance |
| Timeline |
| INTER CARS SA |
| Gamma Communications plc |
INTER CARS and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and Gamma Communications
The main advantage of trading using opposite INTER CARS and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| INTER CARS vs. Cars Inc | INTER CARS vs. Geely Automobile Holdings | INTER CARS vs. Grupo Carso SAB | INTER CARS vs. China Yongda Automobiles |
| Gamma Communications vs. T Mobile | Gamma Communications vs. Verizon Communications | Gamma Communications vs. ATT Inc | Gamma Communications vs. Nippon Telegraph and |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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