Correlation Between Inter Cars and Kool2play
Can any of the company-specific risk be diversified away by investing in both Inter Cars and Kool2play 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 Kool2play 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 Kool2play SA, you can compare the effects of market volatilities on Inter Cars and Kool2play 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 Kool2play. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Cars and Kool2play.
Diversification Opportunities for Inter Cars and Kool2play
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inter and Kool2play is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Inter Cars SA and Kool2play SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kool2play SA 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 Kool2play. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kool2play SA has no effect on the direction of Inter Cars i.e., Inter Cars and Kool2play go up and down completely randomly.
Pair Corralation between Inter Cars and Kool2play
Assuming the 90 days trading horizon Inter Cars SA is expected to generate 0.26 times more return on investment than Kool2play. However, Inter Cars SA is 3.87 times less risky than Kool2play. It trades about -0.02 of its potential returns per unit of risk. Kool2play SA is currently generating about -0.01 per unit of risk. If you would invest 60,021 in Inter Cars SA on September 12, 2024 and sell it today you would lose (8,121) from holding Inter Cars SA or give up 13.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.9% |
| Values | Daily Returns |
Inter Cars SA vs. Kool2play SA
Performance |
| Timeline |
| Inter Cars SA |
| Kool2play SA |
Inter Cars and Kool2play Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Cars and Kool2play
The main advantage of trading using opposite Inter Cars and Kool2play positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Cars position performs unexpectedly, Kool2play 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 Kool2play will offset losses from the drop in Kool2play's long position.| Inter Cars vs. Play2Chill SA | Inter Cars vs. Globe Trade Centre | Inter Cars vs. Centrum Finansowe Banku | Inter Cars vs. Echo Investment SA |
| Kool2play vs. Logintrade SA | Kool2play vs. Play2Chill SA | Kool2play vs. Monnari Trade SA | Kool2play vs. Medicofarma Biotech SA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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