Correlation Between BII Railway and INTER CARS

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

By analyzing existing cross correlation between BII Railway Transportation and INTER CARS SA, you can compare the effects of market volatilities on BII Railway and INTER CARS 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 BII Railway with a short position of INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and INTER CARS.

Diversification Opportunities for BII Railway and INTER CARS

0.29

Correlation Coefficient

BII Railway  INTER CARS

Modest diversification

The 3 months correlation between BII and INTER is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA and BII Railway 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 BII Railway Transportation are associated (or correlated) with INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of BII Railway i.e., BII Railway and INTER CARS go up and down completely randomly.

Pair Corralation between BII Railway and INTER CARS

Assuming the 90 days horizon BII Railway is expected to generate 1.93 times less return on investment than INTER CARS. But when comparing it to its historical volatility, BII Railway Transportation is 1.24 times less risky than INTER CARS. It trades about 0.04 of its potential returns per unit of risk. INTER CARS SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  11,780  in INTER CARS SA on December 27, 2024 and sell it today you would earn a total of  860.00  from holding INTER CARS SA or generate 7.3% return on investment over 90 days.

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

BII Railway Transportation  vs.  INTER CARS SA

BII Railway Transpor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BII Railway is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INTER CARS SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INTER CARS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BII Railway and INTER CARS

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

The idea behind BII Railway Transportation and INTER CARS 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 Global Correlations module to find global opportunities by holding instruments from different markets.