Correlation Between INTER CARS and SIEMENS AG

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

Diversification Opportunities for INTER CARS and SIEMENS AG

-0.05

Correlation Coefficient

INTER CARS  SIEMENS AG

Good diversification

The 3 months correlation between INTER and SIEMENS is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and SIEMENS AG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS AG SP 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 SIEMENS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS AG SP has no effect on the direction of INTER CARS i.e., INTER CARS and SIEMENS AG go up and down completely randomly.

Pair Corralation between INTER CARS and SIEMENS AG

Assuming the 90 days horizon INTER CARS is expected to generate 5.35 times less return on investment than SIEMENS AG. In addition to that, INTER CARS is 1.02 times more volatile than SIEMENS AG SP. It trades about 0.04 of its total potential returns per unit of risk. SIEMENS AG SP is currently generating about 0.19 per unit of volatility. If you would invest  8,000  in SIEMENS AG SP on September 12, 2024 and sell it today you would earn a total of  1,900  from holding SIEMENS AG SP or generate 23.75% return on investment over 90 days.

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

INTER CARS SA  vs.  SIEMENS AG SP

INTER CARS SA

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 2 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

SIEMENS AG SP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS AG SP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SIEMENS AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTER CARS and SIEMENS AG

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

The idea behind INTER CARS SA and SIEMENS AG SP 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.