Correlation Between S Tech and First Steamship
Can any of the company-specific risk be diversified away by investing in both S Tech and First Steamship 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 S Tech and First Steamship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between S Tech Corp and First Steamship Co, you can compare the effects of market volatilities on S Tech and First Steamship 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 S Tech with a short position of First Steamship. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Tech and First Steamship.
Diversification Opportunities for S Tech and First Steamship
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 1584 and First is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding S Tech Corp and First Steamship Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Steamship and S Tech 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 S Tech Corp are associated (or correlated) with First Steamship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Steamship has no effect on the direction of S Tech i.e., S Tech and First Steamship go up and down completely randomly.
Pair Corralation between S Tech and First Steamship
Assuming the 90 days trading horizon S Tech Corp is expected to generate 1.58 times more return on investment than First Steamship. However, S Tech is 1.58 times more volatile than First Steamship Co. It trades about 0.04 of its potential returns per unit of risk. First Steamship Co is currently generating about -0.01 per unit of risk. If you would invest 2,234 in S Tech Corp on August 26, 2024 and sell it today you would earn a total of 956.00 from holding S Tech Corp or generate 42.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
S Tech Corp vs. First Steamship Co
Performance |
| Timeline |
| S Tech Corp |
| First Steamship |
S Tech and First Steamship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S Tech and First Steamship
The main advantage of trading using opposite S Tech and First Steamship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S Tech position performs unexpectedly, First Steamship 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 First Steamship will offset losses from the drop in First Steamship's long position.| S Tech vs. Catcher Technology Co | S Tech vs. Solar Applied Materials | S Tech vs. Shin Zu Shing | S Tech vs. China Metal Products |
| First Steamship vs. Sincere Navigation Corp | First Steamship vs. Evergreen International Storage | First Steamship vs. Far Eastern Department | First Steamship vs. Hung Sheng Construction |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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