Correlation Between Steamships Trading and Adairs
Can any of the company-specific risk be diversified away by investing in both Steamships Trading and Adairs 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 Steamships Trading and Adairs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steamships Trading and Adairs, you can compare the effects of market volatilities on Steamships Trading and Adairs 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 Steamships Trading with a short position of Adairs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steamships Trading and Adairs.
Diversification Opportunities for Steamships Trading and Adairs
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Steamships and Adairs is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Steamships Trading and Adairs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adairs and Steamships Trading 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 Steamships Trading are associated (or correlated) with Adairs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adairs has no effect on the direction of Steamships Trading i.e., Steamships Trading and Adairs go up and down completely randomly.
Pair Corralation between Steamships Trading and Adairs
Assuming the 90 days trading horizon Steamships Trading is expected to under-perform the Adairs. But the stock apears to be less risky and, when comparing its historical volatility, Steamships Trading is 8.35 times less risky than Adairs. The stock trades about -0.02 of its potential returns per unit of risk. The Adairs is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Adairs on September 12, 2024 and sell it today you would earn a total of 106.00 from holding Adairs or generate 60.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Steamships Trading vs. Adairs
Performance |
| Timeline |
| Steamships Trading |
| Adairs |
Steamships Trading and Adairs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steamships Trading and Adairs
The main advantage of trading using opposite Steamships Trading and Adairs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steamships Trading position performs unexpectedly, Adairs 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 Adairs will offset losses from the drop in Adairs' long position.| Steamships Trading vs. Centuria Industrial Reit | Steamships Trading vs. Retail Food Group | Steamships Trading vs. Ironbark Capital | Steamships Trading vs. Aeris Environmental |
| Adairs vs. Kip McGrath Education | Adairs vs. Platinum Asia Investments | Adairs vs. Ras Technology Holdings | Adairs vs. Carlton Investments |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |