Correlation Between First Steamship and China Container
Can any of the company-specific risk be diversified away by investing in both First Steamship and China Container 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 China Container 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 China Container Terminal, you can compare the effects of market volatilities on First Steamship and China Container 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 China Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Steamship and China Container.
Diversification Opportunities for First Steamship and China Container
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and China is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Steamship Co and China Container Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Container Terminal 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 China Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Container Terminal has no effect on the direction of First Steamship i.e., First Steamship and China Container go up and down completely randomly.
Pair Corralation between First Steamship and China Container
Assuming the 90 days trading horizon First Steamship Co is expected to under-perform the China Container. But the stock apears to be less risky and, when comparing its historical volatility, First Steamship Co is 2.99 times less risky than China Container. The stock trades about -0.04 of its potential returns per unit of risk. The China Container Terminal is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,065 in China Container Terminal on August 26, 2024 and sell it today you would earn a total of 405.00 from holding China Container Terminal or generate 13.21% 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. China Container Terminal
Performance |
| Timeline |
| First Steamship |
| China Container Terminal |
First Steamship and China Container Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Steamship and China Container
The main advantage of trading using opposite First Steamship and China Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Steamship position performs unexpectedly, China Container 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 China Container will offset losses from the drop in China Container'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 |
| China Container vs. Sincere Navigation Corp | China Container vs. Evergreen International Storage | China Container vs. Tze Shin International | China Container vs. First Steamship Co |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |