Correlation Between INTER CARS and STORE ELECTRONIC

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

Diversification Opportunities for INTER CARS and STORE ELECTRONIC

0.32

Correlation Coefficient

INTER CARS  STORE ELECTRONIC

Weak diversification

The 3 months correlation between INTER and STORE is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of INTER CARS i.e., INTER CARS and STORE ELECTRONIC go up and down completely randomly.

Pair Corralation between INTER CARS and STORE ELECTRONIC

Assuming the 90 days horizon INTER CARS is expected to generate 25.36 times less return on investment than STORE ELECTRONIC. But when comparing it to its historical volatility, INTER CARS SA is 2.22 times less risky than STORE ELECTRONIC. It trades about 0.04 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  13,870  in STORE ELECTRONIC on October 8, 2024 and sell it today you would earn a total of  4,110  from holding STORE ELECTRONIC or generate 29.63% 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.  STORE ELECTRONIC

INTER CARS SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 4 (%) 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.

STORE ELECTRONIC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STORE ELECTRONIC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, STORE ELECTRONIC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTER CARS and STORE ELECTRONIC

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

The idea behind INTER CARS SA and STORE ELECTRONIC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.