Correlation Between Iat Automobile and Inner Mongolia

Can any of the company-specific risk be diversified away by investing in both Iat Automobile and Inner Mongolia 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 Iat Automobile and Inner Mongolia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iat Automobile Technology and Inner Mongolia BaoTou, you can compare the effects of market volatilities on Iat Automobile and Inner Mongolia 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 Iat Automobile with a short position of Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iat Automobile and Inner Mongolia.

Diversification Opportunities for Iat Automobile and Inner Mongolia

0.75

Correlation Coefficient

Iat Automobile  Inner Mongolia

Poor diversification

The 3 months correlation between Iat and Inner is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and Inner Mongolia BaoTou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia BaoTou and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia BaoTou has no effect on the direction of Iat Automobile i.e., Iat Automobile and Inner Mongolia go up and down completely randomly.

Pair Corralation between Iat Automobile and Inner Mongolia

Assuming the 90 days trading horizon Iat Automobile is expected to generate 1.93 times less return on investment than Inner Mongolia. In addition to that, Iat Automobile is 1.95 times more volatile than Inner Mongolia BaoTou. It trades about 0.01 of its total potential returns per unit of risk. Inner Mongolia BaoTou is currently generating about 0.06 per unit of volatility. If you would invest  143.00  in Inner Mongolia BaoTou on October 9, 2024 and sell it today you would earn a total of  37.00  from holding Inner Mongolia BaoTou or generate 25.87% return on investment over 90 days.

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

Iat Automobile Technology  vs.  Inner Mongolia BaoTou

Iat Automobile Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Inner Mongolia BaoTou

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inner Mongolia BaoTou are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inner Mongolia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Iat Automobile and Inner Mongolia

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

The idea behind Iat Automobile Technology and Inner Mongolia BaoTou 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.