Correlation Between Shipping and SIL Investments

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Can any of the company-specific risk be diversified away by investing in both Shipping and SIL Investments 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 SIL Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shipping and SIL Investments Limited, you can compare the effects of market volatilities on Shipping and SIL Investments 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 SIL Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shipping and SIL Investments.

Diversification Opportunities for Shipping and SIL Investments

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Shipping and SIL is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shipping and SIL Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIL Investments 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 SIL Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIL Investments has no effect on the direction of Shipping i.e., Shipping and SIL Investments go up and down completely randomly.

Pair Corralation between Shipping and SIL Investments

Assuming the 90 days trading horizon Shipping is expected to generate 1.17 times more return on investment than SIL Investments. However, Shipping is 1.17 times more volatile than SIL Investments Limited. It trades about 0.17 of its potential returns per unit of risk. SIL Investments Limited is currently generating about 0.12 per unit of risk. If you would invest  21,328  in Shipping on September 3, 2024 and sell it today you would earn a total of  2,159  from holding Shipping or generate 10.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Shipping  vs.  SIL Investments Limited

 Performance 
       Timeline  
Shipping 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
SIL Investments 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in SIL Investments Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, SIL Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Shipping and SIL Investments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shipping and SIL Investments

The main advantage of trading using opposite Shipping and SIL Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shipping position performs unexpectedly, SIL Investments 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 SIL Investments will offset losses from the drop in SIL Investments' long position.
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The idea behind Shipping and SIL Investments Limited 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.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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