Correlation Between INTER CARS and VIAPLAY GROUP

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

Diversification Opportunities for INTER CARS and VIAPLAY GROUP

-0.58

Correlation Coefficient

INTER CARS  VIAPLAY GROUP

Excellent diversification

The 3 months correlation between INTER and VIAPLAY is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and VIAPLAY GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIAPLAY GROUP AB 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 VIAPLAY GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIAPLAY GROUP AB has no effect on the direction of INTER CARS i.e., INTER CARS and VIAPLAY GROUP go up and down completely randomly.

Pair Corralation between INTER CARS and VIAPLAY GROUP

Assuming the 90 days horizon INTER CARS is expected to generate 150.67 times less return on investment than VIAPLAY GROUP. But when comparing it to its historical volatility, INTER CARS SA is 31.96 times less risky than VIAPLAY GROUP. It trades about 0.04 of its potential returns per unit of risk. VIAPLAY GROUP AB is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5.87  in VIAPLAY GROUP AB on December 29, 2024 and sell it today you would lose (0.79) from holding VIAPLAY GROUP AB or give up 13.46% of portfolio value over 90 days.

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

INTER CARS SA  vs.  VIAPLAY GROUP AB

INTER CARS SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTER CARS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

VIAPLAY GROUP AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VIAPLAY GROUP AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, VIAPLAY GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTER CARS and VIAPLAY GROUP

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

The idea behind INTER CARS SA and VIAPLAY GROUP AB 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.