Correlation Between First Steamship and Sincere Navigation
Can any of the company-specific risk be diversified away by investing in both First Steamship and Sincere Navigation 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 First Steamship and Sincere Navigation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Steamship Co and Sincere Navigation Corp, you can compare the effects of market volatilities on First Steamship and Sincere Navigation 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 First Steamship with a short position of Sincere Navigation. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Steamship and Sincere Navigation.
Diversification Opportunities for First Steamship and Sincere Navigation
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Sincere is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding First Steamship Co and Sincere Navigation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincere Navigation Corp and First Steamship 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 First Steamship Co are associated (or correlated) with Sincere Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincere Navigation Corp has no effect on the direction of First Steamship i.e., First Steamship and Sincere Navigation go up and down completely randomly.
Pair Corralation between First Steamship and Sincere Navigation
Assuming the 90 days trading horizon First Steamship Co is expected to under-perform the Sincere Navigation. But the stock apears to be less risky and, when comparing its historical volatility, First Steamship Co is 1.58 times less risky than Sincere Navigation. The stock trades about -0.01 of its potential returns per unit of risk. The Sincere Navigation Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,990 in Sincere Navigation Corp on August 26, 2024 and sell it today you would earn a total of 780.00 from holding Sincere Navigation Corp or generate 39.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Steamship Co vs. Sincere Navigation Corp
Performance |
| Timeline |
| First Steamship |
| Sincere Navigation Corp |
First Steamship and Sincere Navigation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Steamship and Sincere Navigation
The main advantage of trading using opposite First Steamship and Sincere Navigation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Steamship position performs unexpectedly, Sincere Navigation 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 Sincere Navigation will offset losses from the drop in Sincere Navigation's long position.| First Steamship vs. Sincere Navigation Corp | First Steamship vs. Evergreen International Storage | First Steamship vs. Far Eastern Department | First Steamship vs. Hung Sheng Construction |
| Sincere Navigation vs. U Ming Marine Transport | Sincere Navigation vs. First Steamship Co | Sincere Navigation vs. Evergreen International Storage | Sincere Navigation vs. Wan Hai Lines |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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