Correlation Between Global Ship and Maanshan Iron
Can any of the company-specific risk be diversified away by investing in both Global Ship and Maanshan Iron 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 Maanshan Iron 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 Maanshan Iron Steel, you can compare the effects of market volatilities on Global Ship and Maanshan Iron 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 Maanshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Maanshan Iron.
Diversification Opportunities for Global Ship and Maanshan Iron
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Maanshan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Maanshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maanshan Iron Steel 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 Maanshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maanshan Iron Steel has no effect on the direction of Global Ship i.e., Global Ship and Maanshan Iron go up and down completely randomly.
Pair Corralation between Global Ship and Maanshan Iron
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.15 times more return on investment than Maanshan Iron. However, Global Ship Lease is 6.5 times less risky than Maanshan Iron. It trades about -0.05 of its potential returns per unit of risk. Maanshan Iron Steel is currently generating about -0.21 per unit of risk. If you would invest 2,640 in Global Ship Lease on August 31, 2024 and sell it today you would lose (20.00) from holding Global Ship Lease or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Maanshan Iron Steel
Performance |
| Timeline |
| Global Ship Lease |
| Maanshan Iron Steel |
Global Ship and Maanshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Maanshan Iron
The main advantage of trading using opposite Global Ship and Maanshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Maanshan Iron 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 Maanshan Iron will offset losses from the drop in Maanshan Iron's long position.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
| Maanshan Iron vs. Olympic Steel | Maanshan Iron vs. POSCO Holdings | Maanshan Iron vs. Steel Dynamics | Maanshan Iron vs. Universal Stainless Alloy |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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