Correlation Between Regional Container and Precious Shipping
Can any of the company-specific risk be diversified away by investing in both Regional Container and Precious Shipping 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 Regional Container and Precious Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Container Lines and Precious Shipping Public, you can compare the effects of market volatilities on Regional Container and Precious Shipping 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 Regional Container with a short position of Precious Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and Precious Shipping.
Diversification Opportunities for Regional Container and Precious Shipping
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Regional and Precious is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Precious Shipping Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Shipping Public and Regional Container 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 Regional Container Lines are associated (or correlated) with Precious Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Shipping Public has no effect on the direction of Regional Container i.e., Regional Container and Precious Shipping go up and down completely randomly.
Pair Corralation between Regional Container and Precious Shipping
Assuming the 90 days trading horizon Regional Container Lines is expected to generate 2.79 times more return on investment than Precious Shipping. However, Regional Container is 2.79 times more volatile than Precious Shipping Public. It trades about 0.07 of its potential returns per unit of risk. Precious Shipping Public is currently generating about -0.26 per unit of risk. If you would invest 2,478 in Regional Container Lines on August 28, 2024 and sell it today you would earn a total of 97.00 from holding Regional Container Lines or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Container Lines vs. Precious Shipping Public
Performance |
| Timeline |
| Regional Container Lines |
| Precious Shipping Public |
Regional Container and Precious Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Container and Precious Shipping
The main advantage of trading using opposite Regional Container and Precious Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Container position performs unexpectedly, Precious Shipping 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 Precious Shipping will offset losses from the drop in Precious Shipping's long position.| Regional Container vs. Tata Steel Public | Regional Container vs. Thaifoods Group Public | Regional Container vs. TMT Steel Public | Regional Container vs. The Erawan Group |
| Precious Shipping vs. Tata Steel Public | Precious Shipping vs. Thaifoods Group Public | Precious Shipping vs. TMT Steel Public | Precious Shipping vs. The Erawan Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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