Correlation Between INTER CARS and GRUPO CARSO-A1

Can any of the company-specific risk be diversified away by investing in both INTER CARS and GRUPO CARSO-A1 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 GRUPO CARSO-A1 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 GRUPO CARSO A1, you can compare the effects of market volatilities on INTER CARS and GRUPO CARSO-A1 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 GRUPO CARSO-A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and GRUPO CARSO-A1.

Diversification Opportunities for INTER CARS and GRUPO CARSO-A1

0.13

Correlation Coefficient

INTER CARS  GRUPO CARSO-A1

Average diversification

The 3 months correlation between INTER and GRUPO is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 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 GRUPO CARSO-A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of INTER CARS i.e., INTER CARS and GRUPO CARSO-A1 go up and down completely randomly.

Pair Corralation between INTER CARS and GRUPO CARSO-A1

Assuming the 90 days horizon INTER CARS SA is expected to under-perform the GRUPO CARSO-A1. But the stock apears to be less risky and, when comparing its historical volatility, INTER CARS SA is 1.77 times less risky than GRUPO CARSO-A1. The stock trades about -0.04 of its potential returns per unit of risk. The GRUPO CARSO A1 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  525.00  in GRUPO CARSO A1 on September 2, 2024 and sell it today you would earn a total of  40.00  from holding GRUPO CARSO A1 or generate 7.62% return on investment over 90 days.

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

INTER CARS SA  vs.  GRUPO CARSO A1

INTER CARS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTER CARS SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

GRUPO CARSO A1

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GRUPO CARSO-A1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with INTER CARS and GRUPO CARSO-A1

The main advantage of trading using opposite INTER CARS and GRUPO CARSO-A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, GRUPO CARSO-A1 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 GRUPO CARSO-A1 will offset losses from the drop in GRUPO CARSO-A1's long position.

The idea behind INTER CARS SA and GRUPO CARSO A1 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.