Correlation Between Inter Cars and Immobile

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

Diversification Opportunities for Inter Cars and Immobile

0.42

Correlation Coefficient

Inter Cars  Immobile

Very weak diversification

The 3 months correlation between Inter and Immobile is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Inter Cars SA and Immobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immobile 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 Immobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immobile has no effect on the direction of Inter Cars i.e., Inter Cars and Immobile go up and down completely randomly.

Pair Corralation between Inter Cars and Immobile

Assuming the 90 days trading horizon Inter Cars SA is expected to generate 0.7 times more return on investment than Immobile. However, Inter Cars SA is 1.44 times less risky than Immobile. It trades about 0.17 of its potential returns per unit of risk. Immobile is currently generating about 0.12 per unit of risk. If you would invest  49,350  in Inter Cars SA on November 29, 2024 and sell it today you would earn a total of  9,450  from holding Inter Cars SA or generate 19.15% return on investment over 90 days.

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

Inter Cars SA  vs.  Immobile

Inter Cars SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Cars SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Inter Cars reported solid returns over the last few months and may actually be approaching a breakup point.

Immobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Immobile are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Immobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inter Cars and Immobile

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

The idea behind Inter Cars SA and Immobile 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.