Correlation Between International Consolidated and Caravelle International

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

By analyzing existing cross correlation between International Consolidated Airlines and Caravelle International Group, you can compare the effects of market volatilities on International Consolidated and Caravelle International 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 International Consolidated with a short position of Caravelle International. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Caravelle International.

Diversification Opportunities for International Consolidated and Caravelle International

0.89

Correlation Coefficient

International Consolidated  Caravelle International

Very poor diversification

The 3 months correlation between International and Caravelle is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of International Consolidated i.e., International Consolidated and Caravelle International go up and down completely randomly.

Pair Corralation between International Consolidated and Caravelle International

Assuming the 90 days horizon International Consolidated is expected to generate 6.55 times less return on investment than Caravelle International. But when comparing it to its historical volatility, International Consolidated Airlines is 8.59 times less risky than Caravelle International. It trades about 0.42 of its potential returns per unit of risk. Caravelle International Group is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Caravelle International Group on October 8, 2024 and sell it today you would earn a total of  362.00  from holding Caravelle International Group or generate 724.0% return on investment over 90 days.

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

International Consolidated Air  vs.  Caravelle International Group

International Consolidated

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, International Consolidated showed solid returns over the last few months and may actually be approaching a breakup point.

Caravelle International

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caravelle International Group are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Caravelle International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Consolidated and Caravelle International

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

The idea behind International Consolidated Airlines and Caravelle International Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.