Correlation Between Cars and Kossan Rubber

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

By analyzing existing cross correlation between Cars Inc and Kossan Rubber Industries, you can compare the effects of market volatilities on Cars and Kossan Rubber 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 Kossan Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Kossan Rubber.

Diversification Opportunities for Cars and Kossan Rubber

-0.85

Correlation Coefficient

Cars  Kossan Rubber

Pay attention - limited upside

The 3 months correlation between Cars and Kossan is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Kossan Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kossan Rubber Industries 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 Kossan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kossan Rubber Industries has no effect on the direction of Cars i.e., Cars and Kossan Rubber go up and down completely randomly.

Pair Corralation between Cars and Kossan Rubber

If you would invest  27.00  in Kossan Rubber Industries on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Kossan Rubber Industries or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Cars Inc  vs.  Kossan Rubber Industries

Cars Inc

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Cars is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Kossan Rubber Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kossan Rubber Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental drivers, Kossan Rubber may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Cars and Kossan Rubber

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

The idea behind Cars Inc and Kossan Rubber Industries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.