Correlation Between Global Ship and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Global Ship and Advanced Micro 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 Global Ship and Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Advanced Micro Devices, you can compare the effects of market volatilities on Global Ship and Advanced Micro 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 Global Ship with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Advanced Micro.
Diversification Opportunities for Global Ship and Advanced Micro
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Advanced is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices and Global Ship 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 Global Ship Lease are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Global Ship i.e., Global Ship and Advanced Micro go up and down completely randomly.
Pair Corralation between Global Ship and Advanced Micro
Assuming the 90 days trading horizon Global Ship is expected to generate 3.93 times less return on investment than Advanced Micro. But when comparing it to its historical volatility, Global Ship Lease is 3.66 times less risky than Advanced Micro. It trades about 0.05 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,362 in Advanced Micro Devices on August 26, 2024 and sell it today you would earn a total of 6,473 from holding Advanced Micro Devices or generate 87.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Advanced Micro Devices
Performance |
| Timeline |
| Global Ship Lease |
| Advanced Micro Devices |
Global Ship and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Advanced Micro
The main advantage of trading using opposite Global Ship and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
| Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Intel | Advanced Micro vs. Marvell Technology Group | Advanced Micro vs. Micron Technology |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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