Correlation Between Shipping and Industrial Investment
Can any of the company-specific risk be diversified away by investing in both Shipping and Industrial Investment 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 Shipping and Industrial Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shipping and Industrial Investment Trust, you can compare the effects of market volatilities on Shipping and Industrial Investment 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 Shipping with a short position of Industrial Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shipping and Industrial Investment.
Diversification Opportunities for Shipping and Industrial Investment
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shipping and Industrial is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shipping and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and Shipping 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 Shipping are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Shipping i.e., Shipping and Industrial Investment go up and down completely randomly.
Pair Corralation between Shipping and Industrial Investment
Assuming the 90 days trading horizon Shipping is expected to generate 1.59 times less return on investment than Industrial Investment. In addition to that, Shipping is 1.39 times more volatile than Industrial Investment Trust. It trades about 0.06 of its total potential returns per unit of risk. Industrial Investment Trust is currently generating about 0.13 per unit of volatility. If you would invest 18,575 in Industrial Investment Trust on September 3, 2024 and sell it today you would earn a total of 22,105 from holding Industrial Investment Trust or generate 119.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
Shipping vs. Industrial Investment Trust
Performance |
| Timeline |
| Shipping |
| Industrial Investment |
Shipping and Industrial Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shipping and Industrial Investment
The main advantage of trading using opposite Shipping and Industrial Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shipping position performs unexpectedly, Industrial Investment 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 Industrial Investment will offset losses from the drop in Industrial Investment's long position.| Shipping vs. Sintex Plastics Technology | Shipping vs. Shyam Metalics and | Shipping vs. Hilton Metal Forging | Shipping vs. Sonata Software Limited |
| Industrial Investment vs. Reliance Industries Limited | Industrial Investment vs. Shipping | Industrial Investment vs. Indo Borax Chemicals | Industrial Investment vs. Kingfa Science Technology |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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