Correlation Between Sincere Navigation and First Steamship
Can any of the company-specific risk be diversified away by investing in both Sincere Navigation 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 Sincere Navigation and First Steamship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sincere Navigation Corp and First Steamship Co, you can compare the effects of market volatilities on Sincere Navigation 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 Sincere Navigation with a short position of First Steamship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sincere Navigation and First Steamship.
Diversification Opportunities for Sincere Navigation and First Steamship
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sincere and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sincere Navigation 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 Sincere Navigation 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 Sincere Navigation 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 Sincere Navigation i.e., Sincere Navigation and First Steamship go up and down completely randomly.
Pair Corralation between Sincere Navigation and First Steamship
Assuming the 90 days trading horizon Sincere Navigation Corp is expected to generate 1.55 times more return on investment than First Steamship. However, Sincere Navigation is 1.55 times more volatile than First Steamship Co. It trades about -0.16 of its potential returns per unit of risk. First Steamship Co is currently generating about -0.28 per unit of risk. If you would invest 2,740 in Sincere Navigation Corp on October 24, 2024 and sell it today you would lose (280.00) from holding Sincere Navigation Corp or give up 10.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sincere Navigation Corp vs. First Steamship Co
Performance |
| Timeline |
| Sincere Navigation Corp |
| First Steamship |
Sincere Navigation and First Steamship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sincere Navigation and First Steamship
The main advantage of trading using opposite Sincere Navigation and First Steamship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sincere Navigation 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.| 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 |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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