Correlation Between First Steamship and Sincere Navigation

Can any of the company-specific risk be diversified away by investing in both First Steamship and Sincere Navigation 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 First Steamship and Sincere Navigation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Steamship Co and Sincere Navigation Corp, you can compare the effects of market volatilities on First Steamship and Sincere Navigation 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 First Steamship with a short position of Sincere Navigation. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Steamship and Sincere Navigation.

Diversification Opportunities for First Steamship and Sincere Navigation

0.94

Correlation Coefficient

First Steamship  Sincere Navigation

Almost no diversification

The 3 months correlation between First and Sincere is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Steamship Co and Sincere Navigation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincere Navigation Corp and First Steamship 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 First Steamship Co are associated (or correlated) with Sincere Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincere Navigation Corp has no effect on the direction of First Steamship i.e., First Steamship and Sincere Navigation go up and down completely randomly.

Pair Corralation between First Steamship and Sincere Navigation

Assuming the 90 days trading horizon First Steamship is expected to generate 2.15 times less return on investment than Sincere Navigation. But when comparing it to its historical volatility, First Steamship Co is 1.25 times less risky than Sincere Navigation. It trades about 0.02 of its potential returns per unit of risk. Sincere Navigation Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,510  in Sincere Navigation Corp on December 30, 2024 and sell it today you would earn a total of  70.00  from holding Sincere Navigation Corp or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

First Steamship Co  vs.  Sincere Navigation Corp

First Steamship

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Steamship Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, First Steamship is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sincere Navigation Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sincere Navigation Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sincere Navigation is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Steamship and Sincere Navigation

The main advantage of trading using opposite First Steamship and Sincere Navigation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Steamship position performs unexpectedly, Sincere Navigation 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 Sincere Navigation will offset losses from the drop in Sincere Navigation's long position.

The idea behind First Steamship Co and Sincere Navigation Corp 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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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..