Correlation Between SHIP HEALTHCARE and Air New
Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE and Air New 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 SHIP HEALTHCARE and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and Air New Zealand, you can compare the effects of market volatilities on SHIP HEALTHCARE and Air New 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 SHIP HEALTHCARE with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and Air New.
Diversification Opportunities for SHIP HEALTHCARE and Air New
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between SHIP and Air is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Air New go up and down completely randomly.
Pair Corralation between SHIP HEALTHCARE and Air New
Assuming the 90 days horizon SHIP HEALTHCARE HLDGINC is expected to generate 1.74 times more return on investment than Air New. However, SHIP HEALTHCARE is 1.74 times more volatile than Air New Zealand. It trades about 0.02 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.01 per unit of risk. If you would invest 1,136 in SHIP HEALTHCARE HLDGINC on September 3, 2024 and sell it today you would earn a total of 234.00 from holding SHIP HEALTHCARE HLDGINC or generate 20.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIP HEALTHCARE HLDGINC vs. Air New Zealand
Performance |
| Timeline |
| SHIP HEALTHCARE HLDGINC |
| Air New Zealand |
SHIP HEALTHCARE and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIP HEALTHCARE and Air New
The main advantage of trading using opposite SHIP HEALTHCARE and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| SHIP HEALTHCARE vs. DEVRY EDUCATION GRP | SHIP HEALTHCARE vs. Titan Machinery | SHIP HEALTHCARE vs. CHINA EDUCATION GROUP | SHIP HEALTHCARE vs. United Utilities Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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