Correlation Between ZIM Integrated and Pacific Basin
Can any of the company-specific risk be diversified away by investing in both ZIM Integrated and Pacific Basin 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 ZIM Integrated and Pacific Basin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZIM Integrated Shipping and Pacific Basin Shipping, you can compare the effects of market volatilities on ZIM Integrated and Pacific Basin 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 ZIM Integrated with a short position of Pacific Basin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZIM Integrated and Pacific Basin.
Diversification Opportunities for ZIM Integrated and Pacific Basin
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ZIM and Pacific is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ZIM Integrated Shipping and Pacific Basin Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Basin Shipping and ZIM Integrated 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 ZIM Integrated Shipping are associated (or correlated) with Pacific Basin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Basin Shipping has no effect on the direction of ZIM Integrated i.e., ZIM Integrated and Pacific Basin go up and down completely randomly.
Pair Corralation between ZIM Integrated and Pacific Basin
Considering the 90-day investment horizon ZIM Integrated Shipping is expected to generate 1.4 times more return on investment than Pacific Basin. However, ZIM Integrated is 1.4 times more volatile than Pacific Basin Shipping. It trades about -0.1 of its potential returns per unit of risk. Pacific Basin Shipping is currently generating about -0.2 per unit of risk. If you would invest 2,430 in ZIM Integrated Shipping on September 2, 2024 and sell it today you would lose (226.00) from holding ZIM Integrated Shipping or give up 9.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZIM Integrated Shipping vs. Pacific Basin Shipping
Performance |
| Timeline |
| ZIM Integrated Shipping |
| Pacific Basin Shipping |
ZIM Integrated and Pacific Basin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZIM Integrated and Pacific Basin
The main advantage of trading using opposite ZIM Integrated and Pacific Basin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZIM Integrated position performs unexpectedly, Pacific Basin 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 Pacific Basin will offset losses from the drop in Pacific Basin's long position.| ZIM Integrated vs. Golden Ocean Group | ZIM Integrated vs. Genco Shipping Trading | ZIM Integrated vs. Global Ship Lease | ZIM Integrated vs. Diana Shipping |
| Pacific Basin vs. AP Mller | Pacific Basin vs. COSCO SHIPPING Holdings | Pacific Basin vs. Orient Overseas Limited |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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