Correlation Between Linamar and Superior Industries

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

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

Diversification Opportunities for Linamar and Superior Industries

0.69

Correlation Coefficient

Linamar  Superior Industries

Poor diversification

The 3 months correlation between Linamar and Superior is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Linamar and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries and Linamar 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 Linamar are associated (or correlated) with Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of Linamar i.e., Linamar and Superior Industries go up and down completely randomly.

Pair Corralation between Linamar and Superior Industries

Assuming the 90 days horizon Linamar is expected to generate 0.55 times more return on investment than Superior Industries. However, Linamar is 1.8 times less risky than Superior Industries. It trades about -0.2 of its potential returns per unit of risk. Superior Industries International is currently generating about -0.25 per unit of risk. If you would invest  4,259  in Linamar on September 27, 2024 and sell it today you would lose (280.00) from holding Linamar or give up 6.57% of portfolio value over 90 days.

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

Linamar  vs.  Superior Industries Internatio

Linamar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linamar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Superior Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Industries International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Linamar and Superior Industries

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

The idea behind Linamar and Superior Industries International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.