Correlation Between HAMMONIA Schiffsholding and STRAITS TRADG
Can any of the company-specific risk be diversified away by investing in both HAMMONIA Schiffsholding and STRAITS TRADG 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 HAMMONIA Schiffsholding and STRAITS TRADG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HAMMONIA Schiffsholding AG and STRAITS TRADG SD, you can compare the effects of market volatilities on HAMMONIA Schiffsholding and STRAITS TRADG 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 HAMMONIA Schiffsholding with a short position of STRAITS TRADG. Check out your portfolio center. Please also check ongoing floating volatility patterns of HAMMONIA Schiffsholding and STRAITS TRADG.
Diversification Opportunities for HAMMONIA Schiffsholding and STRAITS TRADG
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HAMMONIA and STRAITS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding HAMMONIA Schiffsholding AG and STRAITS TRADG SD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAITS TRADG SD and HAMMONIA Schiffsholding 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 HAMMONIA Schiffsholding AG are associated (or correlated) with STRAITS TRADG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAITS TRADG SD has no effect on the direction of HAMMONIA Schiffsholding i.e., HAMMONIA Schiffsholding and STRAITS TRADG go up and down completely randomly.
Pair Corralation between HAMMONIA Schiffsholding and STRAITS TRADG
Assuming the 90 days trading horizon HAMMONIA Schiffsholding AG is expected to under-perform the STRAITS TRADG. In addition to that, HAMMONIA Schiffsholding is 1.15 times more volatile than STRAITS TRADG SD. It trades about -0.35 of its total potential returns per unit of risk. STRAITS TRADG SD is currently generating about 0.12 per unit of volatility. If you would invest 100.00 in STRAITS TRADG SD on November 18, 2024 and sell it today you would earn a total of 2.00 from holding STRAITS TRADG SD or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HAMMONIA Schiffsholding AG vs. STRAITS TRADG SD
Performance |
| Timeline |
| HAMMONIA Schiffsholding |
| STRAITS TRADG SD |
HAMMONIA Schiffsholding and STRAITS TRADG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HAMMONIA Schiffsholding and STRAITS TRADG
The main advantage of trading using opposite HAMMONIA Schiffsholding and STRAITS TRADG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HAMMONIA Schiffsholding position performs unexpectedly, STRAITS TRADG 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 STRAITS TRADG will offset losses from the drop in STRAITS TRADG's long position.The idea behind HAMMONIA Schiffsholding AG and STRAITS TRADG SD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| STRAITS TRADG vs. Rio Tinto Group | STRAITS TRADG vs. Anglo American plc | STRAITS TRADG vs. Mineral Resources Limited | STRAITS TRADG vs. Liontown Resources Limited |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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