Correlation Between INTER CARS and HEMISPHERE EGY

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

Diversification Opportunities for INTER CARS and HEMISPHERE EGY

0.29

Correlation Coefficient

INTER CARS  HEMISPHERE EGY

Modest diversification

The 3 months correlation between INTER and HEMISPHERE is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of INTER CARS i.e., INTER CARS and HEMISPHERE EGY go up and down completely randomly.

Pair Corralation between INTER CARS and HEMISPHERE EGY

Assuming the 90 days horizon INTER CARS is expected to generate 5.61 times less return on investment than HEMISPHERE EGY. In addition to that, INTER CARS is 1.62 times more volatile than HEMISPHERE EGY. It trades about 0.01 of its total potential returns per unit of risk. HEMISPHERE EGY is currently generating about 0.1 per unit of volatility. If you would invest  69.00  in HEMISPHERE EGY on October 5, 2024 and sell it today you would earn a total of  54.00  from holding HEMISPHERE EGY or generate 78.26% return on investment over 90 days.

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

INTER CARS SA  vs.  HEMISPHERE EGY

INTER CARS SA

Risk-Adjusted Performance

0 of 100

Insignificant

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.

HEMISPHERE EGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEMISPHERE EGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEMISPHERE EGY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with INTER CARS and HEMISPHERE EGY

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

The idea behind INTER CARS SA and HEMISPHERE EGY 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 Global Correlations module to find global opportunities by holding instruments from different markets.