Correlation Between INTER CARS and Dell Technologies

Can any of the company-specific risk be diversified away by investing in both INTER CARS and Dell Technologies 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 Dell Technologies 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 Dell Technologies, you can compare the effects of market volatilities on INTER CARS and Dell Technologies 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 Dell Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Dell Technologies.

Diversification Opportunities for INTER CARS and Dell Technologies

-0.6

Correlation Coefficient

INTER CARS  Dell Technologies

Excellent diversification

The 3 months correlation between INTER and Dell is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of INTER CARS i.e., INTER CARS and Dell Technologies go up and down completely randomly.

Pair Corralation between INTER CARS and Dell Technologies

Assuming the 90 days horizon INTER CARS SA is expected to under-perform the Dell Technologies. But the stock apears to be less risky and, when comparing its historical volatility, INTER CARS SA is 2.03 times less risky than Dell Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Dell Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,573  in Dell Technologies on September 27, 2024 and sell it today you would earn a total of  4,845  from holding Dell Technologies or generate 73.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

INTER CARS SA  vs.  Dell Technologies

INTER CARS SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTER CARS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dell Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Dell Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with INTER CARS and Dell Technologies

The main advantage of trading using opposite INTER CARS and Dell Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, Dell Technologies 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 Dell Technologies will offset losses from the drop in Dell Technologies' long position.

The idea behind INTER CARS SA and Dell Technologies 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.