Correlation Between INTER CARS and Take-Two Interactive
Can any of the company-specific risk be diversified away by investing in both INTER CARS and Take-Two Interactive 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 Take-Two Interactive 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 Take Two Interactive Software, you can compare the effects of market volatilities on INTER CARS and Take-Two Interactive 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 Take-Two Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Take-Two Interactive.
Diversification Opportunities for INTER CARS and Take-Two Interactive
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between INTER and Take-Two is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take-Two Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of INTER CARS i.e., INTER CARS and Take-Two Interactive go up and down completely randomly.
Pair Corralation between INTER CARS and Take-Two Interactive
Assuming the 90 days horizon INTER CARS SA is expected to generate 1.65 times more return on investment than Take-Two Interactive. However, INTER CARS is 1.65 times more volatile than Take Two Interactive Software. It trades about 0.25 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about -0.08 per unit of risk. If you would invest 10,700 in INTER CARS SA on September 22, 2024 and sell it today you would earn a total of 1,180 from holding INTER CARS SA or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. Take Two Interactive Software
Performance |
| Timeline |
| INTER CARS SA |
| Take Two Interactive |
INTER CARS and Take-Two Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and Take-Two Interactive
The main advantage of trading using opposite INTER CARS and Take-Two Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, Take-Two Interactive 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 Take-Two Interactive will offset losses from the drop in Take-Two Interactive's long position.The idea behind INTER CARS SA and Take Two Interactive Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Take-Two Interactive vs. Nintendo Co | Take-Two Interactive vs. Nintendo Co | Take-Two Interactive vs. Sea Limited | Take-Two Interactive vs. Electronic Arts |
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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