Correlation Between INTER CARS and COMMERCIAL VEHICLE

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

Diversification Opportunities for INTER CARS and COMMERCIAL VEHICLE

0.62

Correlation Coefficient

INTER CARS  COMMERCIAL VEHICLE

Poor diversification

The 3 months correlation between INTER and COMMERCIAL is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of INTER CARS i.e., INTER CARS and COMMERCIAL VEHICLE go up and down completely randomly.

Pair Corralation between INTER CARS and COMMERCIAL VEHICLE

Assuming the 90 days horizon INTER CARS SA is expected to generate 0.43 times more return on investment than COMMERCIAL VEHICLE. However, INTER CARS SA is 2.32 times less risky than COMMERCIAL VEHICLE. It trades about -0.05 of its potential returns per unit of risk. COMMERCIAL VEHICLE is currently generating about -0.09 per unit of risk. If you would invest  12,040  in INTER CARS SA on September 3, 2024 and sell it today you would lose (840.00) from holding INTER CARS SA or give up 6.98% of portfolio value over 90 days.

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

INTER CARS SA  vs.  COMMERCIAL VEHICLE

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.

COMMERCIAL VEHICLE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMMERCIAL VEHICLE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with INTER CARS and COMMERCIAL VEHICLE

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

The idea behind INTER CARS SA and COMMERCIAL VEHICLE 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.