Correlation Between BII Railway and Global Ship
Can any of the company-specific risk be diversified away by investing in both BII Railway and Global Ship 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 BII Railway and Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Global Ship Lease, you can compare the effects of market volatilities on BII Railway and Global Ship 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 BII Railway with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Global Ship.
Diversification Opportunities for BII Railway and Global Ship
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BII and Global is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and BII Railway 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 BII Railway Transportation are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of BII Railway i.e., BII Railway and Global Ship go up and down completely randomly.
Pair Corralation between BII Railway and Global Ship
Assuming the 90 days horizon BII Railway is expected to generate 1.1 times less return on investment than Global Ship. But when comparing it to its historical volatility, BII Railway Transportation is 1.19 times less risky than Global Ship. It trades about 0.13 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,060 in Global Ship Lease on October 17, 2024 and sell it today you would earn a total of 84.00 from holding Global Ship Lease or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Global Ship Lease
Performance |
| Timeline |
| BII Railway Transpor |
| Global Ship Lease |
BII Railway and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Global Ship
The main advantage of trading using opposite BII Railway and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| BII Railway vs. GWILLI FOOD | BII Railway vs. INDOFOOD AGRI RES | BII Railway vs. Cal Maine Foods | BII Railway vs. COFCO Joycome Foods |
| Global Ship vs. BII Railway Transportation | Global Ship vs. USWE SPORTS AB | Global Ship vs. Yuexiu Transport Infrastructure | Global Ship vs. TITANIUM TRANSPORTGROUP |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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