Correlation Between Pacific Basin and MPC Container
Can any of the company-specific risk be diversified away by investing in both Pacific Basin and MPC Container 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 Pacific Basin and MPC Container into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Basin Shipping and MPC Container Ships, you can compare the effects of market volatilities on Pacific Basin and MPC Container 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 Pacific Basin with a short position of MPC Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and MPC Container.
Diversification Opportunities for Pacific Basin and MPC Container
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pacific and MPC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of Pacific Basin i.e., Pacific Basin and MPC Container go up and down completely randomly.
Pair Corralation between Pacific Basin and MPC Container
Assuming the 90 days horizon Pacific Basin is expected to generate 4.43 times less return on investment than MPC Container. But when comparing it to its historical volatility, Pacific Basin Shipping is 1.81 times less risky than MPC Container. It trades about 0.02 of its potential returns per unit of risk. MPC Container Ships is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 115.00 in MPC Container Ships on August 28, 2024 and sell it today you would earn a total of 95.00 from holding MPC Container Ships or generate 82.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.74% |
| Values | Daily Returns |
Pacific Basin Shipping vs. MPC Container Ships
Performance |
| Timeline |
| Pacific Basin Shipping |
| MPC Container Ships |
Pacific Basin and MPC Container Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Basin and MPC Container
The main advantage of trading using opposite Pacific Basin and MPC Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Basin position performs unexpectedly, MPC Container 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 MPC Container will offset losses from the drop in MPC Container's long position.| Pacific Basin vs. Kawasaki Kisen Kaisha | Pacific Basin vs. Hapag Lloyd Aktiengesellschaft | Pacific Basin vs. Hapag Lloyd Aktiengesellschaft | Pacific Basin vs. SITC International Holdings |
| MPC Container vs. AP Mller | MPC Container vs. COSCO SHIPPING Holdings | MPC Container vs. Orient Overseas 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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