Correlation Between Service Team and Commercial Vehicle

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

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

Diversification Opportunities for Service Team and Commercial Vehicle

0.0

Correlation Coefficient

Service Team  Commercial Vehicle

Pay attention - limited upside

The 3 months correlation between Service and Commercial is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Service Team and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle and Service Team 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 Service Team are associated (or correlated) with Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Service Team i.e., Service Team and Commercial Vehicle go up and down completely randomly.

Pair Corralation between Service Team and Commercial Vehicle

If you would invest  0.01  in Service Team on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Service Team or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Service Team  vs.  Commercial Vehicle Group

Service Team

Risk-Adjusted Performance

Very Weak

Over the last 90 days Service Team has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Service Team is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Commercial Vehicle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commercial Vehicle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Service Team and Commercial Vehicle

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

The idea behind Service Team and Commercial Vehicle 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.