Correlation Between Cars and VPower Group
Can any of the company-specific risk be diversified away by investing in both Cars and VPower Group 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 Cars and VPower Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and VPower Group International, you can compare the effects of market volatilities on Cars and VPower Group 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 Cars with a short position of VPower Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and VPower Group.
Diversification Opportunities for Cars and VPower Group
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cars and VPower is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and VPower Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VPower Group Interna and 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 Cars Inc are associated (or correlated) with VPower Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VPower Group Interna has no effect on the direction of Cars i.e., Cars and VPower Group go up and down completely randomly.
Pair Corralation between Cars and VPower Group
Assuming the 90 days horizon Cars is expected to generate 6.65 times less return on investment than VPower Group. But when comparing it to its historical volatility, Cars Inc is 5.49 times less risky than VPower Group. It trades about 0.03 of its potential returns per unit of risk. VPower Group International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.55 in VPower Group International on October 1, 2024 and sell it today you would lose (4.55) from holding VPower Group International or give up 81.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.81% |
| Values | Daily Returns |
Cars Inc vs. VPower Group International
Performance |
| Timeline |
| Cars Inc |
| VPower Group Interna |
Cars and VPower Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and VPower Group
The main advantage of trading using opposite Cars and VPower Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, VPower Group 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 VPower Group will offset losses from the drop in VPower Group's long position.| Cars vs. National Bank Holdings | Cars vs. Regions Financial | Cars vs. CREDIT AGRICOLE | Cars vs. ADRIATIC METALS LS 013355 |
| VPower Group vs. Adtalem Global Education | VPower Group vs. VIVA WINE GROUP | VPower Group vs. United States Steel | VPower Group vs. CosmoSteel Holdings Limited |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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