Correlation Between Autocorp Holding and President Automobile

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

By analyzing existing cross correlation between Autocorp Holding Public and President Automobile Industries, you can compare the effects of market volatilities on Autocorp Holding and President Automobile 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 Autocorp Holding with a short position of President Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autocorp Holding and President Automobile.

Diversification Opportunities for Autocorp Holding and President Automobile

0.48

Correlation Coefficient

Autocorp Holding  President Automobile

Very weak diversification

The 3 months correlation between Autocorp and President is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Autocorp Holding Public and President Automobile Industrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Automobile and Autocorp Holding 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 Autocorp Holding Public are associated (or correlated) with President Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Automobile has no effect on the direction of Autocorp Holding i.e., Autocorp Holding and President Automobile go up and down completely randomly.

Pair Corralation between Autocorp Holding and President Automobile

Assuming the 90 days trading horizon Autocorp Holding Public is expected to generate 3.91 times more return on investment than President Automobile. However, Autocorp Holding is 3.91 times more volatile than President Automobile Industries. It trades about 0.03 of its potential returns per unit of risk. President Automobile Industries is currently generating about -0.15 per unit of risk. If you would invest  89.00  in Autocorp Holding Public on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Autocorp Holding Public or generate 2.25% return on investment over 90 days.

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

Autocorp Holding Public  vs.  President Automobile Industrie

Autocorp Holding Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autocorp Holding Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Autocorp Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

President Automobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Automobile Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Autocorp Holding and President Automobile

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

The idea behind Autocorp Holding Public and President Automobile Industries 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.