Correlation Between Sea Air and Damsan JSC
Can any of the company-specific risk be diversified away by investing in both Sea Air and Damsan JSC 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 Sea Air and Damsan JSC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea Air Freight and Damsan JSC, you can compare the effects of market volatilities on Sea Air and Damsan JSC 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 Sea Air with a short position of Damsan JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Air and Damsan JSC.
Diversification Opportunities for Sea Air and Damsan JSC
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sea and Damsan is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sea Air Freight and Damsan JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damsan JSC and Sea Air 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 Sea Air Freight are associated (or correlated) with Damsan JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damsan JSC has no effect on the direction of Sea Air i.e., Sea Air and Damsan JSC go up and down completely randomly.
Pair Corralation between Sea Air and Damsan JSC
Assuming the 90 days trading horizon Sea Air Freight is expected to under-perform the Damsan JSC. In addition to that, Sea Air is 1.64 times more volatile than Damsan JSC. It trades about -0.21 of its total potential returns per unit of risk. Damsan JSC is currently generating about -0.28 per unit of volatility. If you would invest 929,000 in Damsan JSC on August 29, 2024 and sell it today you would lose (47,000) from holding Damsan JSC or give up 5.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Sea Air Freight vs. Damsan JSC
Performance |
| Timeline |
| Sea Air Freight |
| Damsan JSC |
Sea Air and Damsan JSC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea Air and Damsan JSC
The main advantage of trading using opposite Sea Air and Damsan JSC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea Air position performs unexpectedly, Damsan JSC 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 Damsan JSC will offset losses from the drop in Damsan JSC's long position.| Sea Air vs. FIT INVEST JSC | Sea Air vs. Damsan JSC | Sea Air vs. An Phat Plastic | Sea Air vs. APG Securities Joint |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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