Correlation Between Inter Cars and SOFTWARE MANSION

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

Diversification Opportunities for Inter Cars and SOFTWARE MANSION

-0.04

Correlation Coefficient

Inter Cars  SOFTWARE MANSION

Good diversification

The 3 months correlation between Inter and SOFTWARE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Inter Cars SA and SOFTWARE MANSION SPOLKA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTWARE MANSION SPOLKA 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 SOFTWARE MANSION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTWARE MANSION SPOLKA has no effect on the direction of Inter Cars i.e., Inter Cars and SOFTWARE MANSION go up and down completely randomly.

Pair Corralation between Inter Cars and SOFTWARE MANSION

Assuming the 90 days trading horizon Inter Cars SA is expected to generate 0.83 times more return on investment than SOFTWARE MANSION. However, Inter Cars SA is 1.2 times less risky than SOFTWARE MANSION. It trades about 0.03 of its potential returns per unit of risk. SOFTWARE MANSION SPOLKA is currently generating about -0.05 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  1,400  from holding Inter Cars SA or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Inter Cars SA  vs.  SOFTWARE MANSION SPOLKA

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.

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOFTWARE MANSION SPOLKA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Inter Cars and SOFTWARE MANSION

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

The idea behind Inter Cars SA and SOFTWARE MANSION SPOLKA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.