Correlation Between Kirby and Pacific Basin
Can any of the company-specific risk be diversified away by investing in both Kirby and Pacific Basin 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 Kirby and Pacific Basin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kirby and Pacific Basin Shipping, you can compare the effects of market volatilities on Kirby and Pacific Basin 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 Kirby with a short position of Pacific Basin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirby and Pacific Basin.
Diversification Opportunities for Kirby and Pacific Basin
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kirby and Pacific is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kirby and Pacific Basin Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Basin Shipping and Kirby 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 Kirby are associated (or correlated) with Pacific Basin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Basin Shipping has no effect on the direction of Kirby i.e., Kirby and Pacific Basin go up and down completely randomly.
Pair Corralation between Kirby and Pacific Basin
Considering the 90-day investment horizon Kirby is expected to generate 0.61 times more return on investment than Pacific Basin. However, Kirby is 1.63 times less risky than Pacific Basin. It trades about 0.03 of its potential returns per unit of risk. Pacific Basin Shipping is currently generating about -0.08 per unit of risk. If you would invest 12,306 in Kirby on August 28, 2024 and sell it today you would earn a total of 742.00 from holding Kirby or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Kirby vs. Pacific Basin Shipping
Performance |
| Timeline |
| Kirby |
| Pacific Basin Shipping |
Kirby and Pacific Basin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kirby and Pacific Basin
The main advantage of trading using opposite Kirby and Pacific Basin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirby position performs unexpectedly, Pacific Basin 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 Pacific Basin will offset losses from the drop in Pacific Basin's long position.The idea behind Kirby and Pacific Basin Shipping 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.| Pacific Basin vs. Copa Holdings SA | Pacific Basin vs. United Airlines Holdings | Pacific Basin vs. Delta Air Lines | Pacific Basin vs. SkyWest |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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