Correlation Between Cars and Infinity Pharmaceuticals

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

By analyzing existing cross correlation between Cars Inc and Infinity Pharmaceuticals, you can compare the effects of market volatilities on Cars and Infinity Pharmaceuticals 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 Cars with a short position of Infinity Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Infinity Pharmaceuticals.

Diversification Opportunities for Cars and Infinity Pharmaceuticals

0.3

Correlation Coefficient

Cars  Infinity Pharmaceuticals

Weak diversification

The 3 months correlation between Cars and Infinity is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Infinity Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinity Pharmaceuticals and 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 Cars Inc are associated (or correlated) with Infinity Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinity Pharmaceuticals has no effect on the direction of Cars i.e., Cars and Infinity Pharmaceuticals go up and down completely randomly.

Pair Corralation between Cars and Infinity Pharmaceuticals

Given the investment horizon of 90 days Cars Inc is expected to under-perform the Infinity Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Cars Inc is 33.29 times less risky than Infinity Pharmaceuticals. The stock trades about -0.16 of its potential returns per unit of risk. The Infinity Pharmaceuticals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Infinity Pharmaceuticals on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Infinity Pharmaceuticals or generate 9.223372036854776E16% return on investment over 90 days.

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

Cars Inc  vs.  Infinity Pharmaceuticals

Cars Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cars Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Infinity Pharmaceuticals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infinity Pharmaceuticals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Infinity Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cars and Infinity Pharmaceuticals

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

The idea behind Cars Inc and Infinity Pharmaceuticals 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 Stocks Directory module to find actively traded stocks across global markets.