Correlation Between Inter Cars and Novavis Group

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

Diversification Opportunities for Inter Cars and Novavis Group

0.05

Correlation Coefficient

Inter Cars  Novavis Group

Significant diversification

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

Pair Corralation between Inter Cars and Novavis Group

Assuming the 90 days trading horizon Inter Cars SA is expected to generate 0.97 times more return on investment than Novavis Group. However, Inter Cars SA is 1.03 times less risky than Novavis Group. It trades about 0.03 of its potential returns per unit of risk. Novavis Group SA is currently generating about -0.21 per unit of risk. If you would invest  50,500  in Inter Cars SA on September 12, 2024 and sell it today you would earn a total of  1,000.00  from holding Inter Cars SA or generate 1.98% return on investment over 90 days.

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

Inter Cars SA  vs.  Novavis Group SA

Inter Cars SA

Risk-Adjusted Performance

2 of 100

Weak

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. Even with relatively invariable basic indicators, Inter Cars is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Novavis Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novavis Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Inter Cars and Novavis Group

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

The idea behind Inter Cars SA and Novavis Group SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.