Correlation Between DFDS AS and Pacific Basin
Can any of the company-specific risk be diversified away by investing in both DFDS AS and Pacific Basin 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 DFDS AS and Pacific Basin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFDS AS and Pacific Basin Shipping, you can compare the effects of market volatilities on DFDS AS and Pacific Basin 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 DFDS AS with a short position of Pacific Basin. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFDS AS and Pacific Basin.
Diversification Opportunities for DFDS AS and Pacific Basin
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DFDS and Pacific is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DFDS AS and Pacific Basin Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Basin Shipping and DFDS AS 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 DFDS AS are associated (or correlated) with Pacific Basin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Basin Shipping has no effect on the direction of DFDS AS i.e., DFDS AS and Pacific Basin go up and down completely randomly.
Pair Corralation between DFDS AS and Pacific Basin
Assuming the 90 days horizon DFDS AS is expected to under-perform the Pacific Basin. But the stock apears to be less risky and, when comparing its historical volatility, DFDS AS is 1.04 times less risky than Pacific Basin. The stock trades about -0.17 of its potential returns per unit of risk. The Pacific Basin Shipping is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Pacific Basin Shipping on November 1, 2024 and sell it today you would lose (5.00) from holding Pacific Basin Shipping or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFDS AS vs. Pacific Basin Shipping
Performance |
| Timeline |
| DFDS AS |
| Pacific Basin Shipping |
DFDS AS and Pacific Basin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFDS AS and Pacific Basin
The main advantage of trading using opposite DFDS AS and Pacific Basin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFDS AS position performs unexpectedly, Pacific Basin 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 Pacific Basin will offset losses from the drop in Pacific Basin's long position.| DFDS AS vs. Ross Stores | DFDS AS vs. WESTLAKE CHEMICAL | DFDS AS vs. Quaker Chemical | DFDS AS vs. PICKN PAY STORES |
| Pacific Basin vs. LAir Liquide SA | Pacific Basin vs. Yuexiu Transport Infrastructure | Pacific Basin vs. AIR LIQUIDE ADR | Pacific Basin vs. PARKEN Sport Entertainment |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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