Correlation Between Global Standard and Incar Financial

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

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

Diversification Opportunities for Global Standard and Incar Financial

-0.35

Correlation Coefficient

Global Standard  Incar Financial

Very good diversification

The 3 months correlation between Global and Incar is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology 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 Global Standard 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 Global Standard Technology 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 Global Standard i.e., Global Standard and Incar Financial go up and down completely randomly.

Pair Corralation between Global Standard and Incar Financial

Assuming the 90 days trading horizon Global Standard is expected to generate 8.58 times less return on investment than Incar Financial. In addition to that, Global Standard is 1.02 times more volatile than Incar Financial Service. It trades about 0.01 of its total potential returns per unit of risk. Incar Financial Service is currently generating about 0.11 per unit of volatility. If you would invest  456,500  in Incar Financial Service on September 24, 2024 and sell it today you would earn a total of  93,500  from holding Incar Financial Service or generate 20.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Global Standard Technology  vs.  Incar Financial Service

Global Standard Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Standard Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Global Standard is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Incar Financial Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Incar Financial Service are ranked lower than 8 (%) 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 Global Standard and Incar Financial

The main advantage of trading using opposite Global Standard and Incar Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard 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 Global Standard Technology 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.