Correlation Between INTER CARS and Cars
Can any of the company-specific risk be diversified away by investing in both INTER CARS and 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 INTER CARS and Cars 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 Cars Inc, you can compare the effects of market volatilities on INTER CARS and 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 INTER CARS with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Cars.
Diversification Opportunities for INTER CARS and Cars
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between INTER and Cars is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of INTER CARS i.e., INTER CARS and Cars go up and down completely randomly.
Pair Corralation between INTER CARS and Cars
Assuming the 90 days horizon INTER CARS SA is expected to generate 0.75 times more return on investment than Cars. However, INTER CARS SA is 1.33 times less risky than Cars. It trades about 0.27 of its potential returns per unit of risk. Cars Inc is currently generating about 0.14 per unit of risk. If you would invest 11,880 in INTER CARS SA on November 2, 2024 and sell it today you would earn a total of 1,280 from holding INTER CARS SA or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. Cars Inc
Performance |
| Timeline |
| INTER CARS SA |
| Cars Inc |
INTER CARS and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and Cars
The main advantage of trading using opposite INTER CARS and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, 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 Cars will offset losses from the drop in Cars' long position.| INTER CARS vs. Cardinal Health | INTER CARS vs. National Health Investors | INTER CARS vs. Chunghwa Telecom Co | INTER CARS vs. HEALTHSTREAM |
| Cars vs. Easy Software AG | Cars vs. Air Transport Services | Cars vs. Kingdee International Software | Cars vs. Yuexiu Transport Infrastructure |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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