Correlation Between INTER CARS and BC IRON

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

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

Diversification Opportunities for INTER CARS and BC IRON

0.41

Correlation Coefficient

INTER CARS  BC IRON

Very weak diversification

The 3 months correlation between INTER and BC3 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON and INTER 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 INTER CARS SA are associated (or correlated) with BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of INTER CARS i.e., INTER CARS and BC IRON go up and down completely randomly.

Pair Corralation between INTER CARS and BC IRON

Assuming the 90 days horizon INTER CARS is expected to generate 3.15 times less return on investment than BC IRON. But when comparing it to its historical volatility, INTER CARS SA is 1.26 times less risky than BC IRON. It trades about 0.08 of its potential returns per unit of risk. BC IRON is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  14.00  in BC IRON on April 20, 2025 and sell it today you would earn a total of  5.00  from holding BC IRON or generate 35.71% return on investment over 90 days.

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

INTER CARS SA  vs.  BC IRON

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 6 (%) 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 August 2025.

BC IRON

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BC IRON are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BC IRON unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTER CARS and BC IRON

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

The idea behind INTER CARS SA and BC IRON 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.