Correlation Between Incar Financial and KIWI Media

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

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

Diversification Opportunities for Incar Financial and KIWI Media

-0.15

Correlation Coefficient

Incar Financial  KIWI Media

Good diversification

The 3 months correlation between Incar and KIWI is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Incar Financial Service and KIWI Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIWI Media Group and Incar Financial 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 Incar Financial Service are associated (or correlated) with KIWI Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIWI Media Group has no effect on the direction of Incar Financial i.e., Incar Financial and KIWI Media go up and down completely randomly.

Pair Corralation between Incar Financial and KIWI Media

Assuming the 90 days trading horizon Incar Financial Service is expected to generate 0.32 times more return on investment than KIWI Media. However, Incar Financial Service is 3.14 times less risky than KIWI Media. It trades about 0.14 of its potential returns per unit of risk. KIWI Media Group is currently generating about -0.01 per unit of risk. If you would invest  543,100  in Incar Financial Service on December 23, 2024 and sell it today you would earn a total of  114,900  from holding Incar Financial Service or generate 21.16% return on investment over 90 days.

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

Incar Financial Service  vs.  KIWI Media Group

Incar Financial Service

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Incar Financial Service are ranked lower than 10 (%) 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.

KIWI Media Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Incar Financial and KIWI Media

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

The idea behind Incar Financial Service and KIWI Media Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.