Correlation Between StealthGas and Caravelle International
Can any of the company-specific risk be diversified away by investing in both StealthGas and Caravelle International 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 StealthGas and Caravelle International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between StealthGas and Caravelle International Group, you can compare the effects of market volatilities on StealthGas and Caravelle International 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 StealthGas with a short position of Caravelle International. Check out your portfolio center. Please also check ongoing floating volatility patterns of StealthGas and Caravelle International.
Diversification Opportunities for StealthGas and Caravelle International
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between StealthGas and Caravelle is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding StealthGas and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International and StealthGas 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 StealthGas are associated (or correlated) with Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of StealthGas i.e., StealthGas and Caravelle International go up and down completely randomly.
Pair Corralation between StealthGas and Caravelle International
Given the investment horizon of 90 days StealthGas is expected to under-perform the Caravelle International. But the stock apears to be less risky and, when comparing its historical volatility, StealthGas is 2.69 times less risky than Caravelle International. The stock trades about -0.07 of its potential returns per unit of risk. The Caravelle International Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 101.00 in Caravelle International Group on August 28, 2024 and sell it today you would earn a total of 30.00 from holding Caravelle International Group or generate 29.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
StealthGas vs. Caravelle International Group
Performance |
| Timeline |
| StealthGas |
| Caravelle International |
StealthGas and Caravelle International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with StealthGas and Caravelle International
The main advantage of trading using opposite StealthGas and Caravelle International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StealthGas position performs unexpectedly, Caravelle International 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 Caravelle International will offset losses from the drop in Caravelle International's long position.| StealthGas vs. Danaos | StealthGas vs. Global Ship Lease | StealthGas vs. Euroseas | StealthGas vs. Navios Maritime Partners |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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