Correlation Between Superior Industries and Linamar

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

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

Diversification Opportunities for Superior Industries and Linamar

0.12

Correlation Coefficient

Superior Industries  Linamar

Average diversification

The 3 months correlation between Superior and Linamar is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Superior Industries Internatio and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar and Superior Industries 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 Superior Industries International are associated (or correlated) with Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Superior Industries i.e., Superior Industries and Linamar go up and down completely randomly.

Pair Corralation between Superior Industries and Linamar

Considering the 90-day investment horizon Superior Industries International is expected to generate 2.47 times more return on investment than Linamar. However, Superior Industries is 2.47 times more volatile than Linamar. It trades about 0.05 of its potential returns per unit of risk. Linamar is currently generating about -0.09 per unit of risk. If you would invest  200.00  in Superior Industries International on December 30, 2024 and sell it today you would earn a total of  16.00  from holding Superior Industries International or generate 8.0% return on investment over 90 days.

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

Superior Industries Internatio  vs.  Linamar

Superior Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Industries International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Superior Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Linamar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Linamar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Superior Industries and Linamar

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

The idea behind Superior Industries International and Linamar 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.