Correlation Between Samlip General and Incar Financial

Can any of the company-specific risk be diversified away by investing in both Samlip General and Incar Financial 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 Samlip General and Incar Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samlip General Foods and Incar Financial Service, you can compare the effects of market volatilities on Samlip General and Incar Financial 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 Samlip General with a short position of Incar Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samlip General and Incar Financial.

Diversification Opportunities for Samlip General and Incar Financial

-0.59

Correlation Coefficient

Samlip General  Incar Financial

Excellent diversification

The 3 months correlation between Samlip and Incar is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Incar Financial Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incar Financial Service and Samlip General 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 Samlip General Foods are associated (or correlated) with Incar Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incar Financial Service has no effect on the direction of Samlip General i.e., Samlip General and Incar Financial go up and down completely randomly.

Pair Corralation between Samlip General and Incar Financial

Assuming the 90 days trading horizon Samlip General Foods is expected to generate 0.69 times more return on investment than Incar Financial. However, Samlip General Foods is 1.45 times less risky than Incar Financial. It trades about 0.46 of its potential returns per unit of risk. Incar Financial Service is currently generating about -0.19 per unit of risk. If you would invest  4,529,747  in Samlip General Foods on October 7, 2024 and sell it today you would earn a total of  720,253  from holding Samlip General Foods or generate 15.9% return on investment over 90 days.

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

Samlip General Foods  vs.  Incar Financial Service

Samlip General Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samlip General Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samlip General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Incar Financial Service

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Incar Financial Service are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Incar Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samlip General and Incar Financial

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

The idea behind Samlip General Foods and Incar Financial Service 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.