Correlation Between INTER CARS and Carsales
Can any of the company-specific risk be diversified away by investing in both INTER CARS and Carsales 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 Carsales 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 Carsales, you can compare the effects of market volatilities on INTER CARS and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Carsales.
Diversification Opportunities for INTER CARS and Carsales
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INTER and Carsales is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of INTER CARS i.e., INTER CARS and Carsales go up and down completely randomly.
Pair Corralation between INTER CARS and Carsales
Assuming the 90 days horizon INTER CARS SA is expected to generate 1.12 times more return on investment than Carsales. However, INTER CARS is 1.12 times more volatile than Carsales. It trades about 0.12 of its potential returns per unit of risk. Carsales is currently generating about 0.11 per unit of risk. If you would invest 12,280 in INTER CARS SA on November 8, 2024 and sell it today you would earn a total of 720.00 from holding INTER CARS SA or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
INTER CARS SA vs. Carsales
Performance |
| Timeline |
| INTER CARS SA |
| Carsales |
INTER CARS and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and Carsales
The main advantage of trading using opposite INTER CARS and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| INTER CARS vs. China Railway Construction | INTER CARS vs. Penta Ocean Construction Co | INTER CARS vs. Titan Machinery | INTER CARS vs. Tokyu Construction Co |
| Carsales vs. Apollo Investment Corp | Carsales vs. PennantPark Investment | Carsales vs. Chuangs China Investments | Carsales vs. HK Electric Investments |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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