Correlation Between DFDS AS and ZIM Integrated

Can any of the company-specific risk be diversified away by investing in both DFDS AS and ZIM Integrated 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 DFDS AS and ZIM Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DFDS AS and ZIM Integrated Shipping, you can compare the effects of market volatilities on DFDS AS and ZIM Integrated 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 DFDS AS with a short position of ZIM Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFDS AS and ZIM Integrated.

Diversification Opportunities for DFDS AS and ZIM Integrated

-0.54

Correlation Coefficient

DFDS AS  ZIM Integrated

Excellent diversification

The 3 months correlation between DFDS and ZIM is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding DFDS AS and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping and DFDS AS 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 DFDS AS are associated (or correlated) with ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of DFDS AS i.e., DFDS AS and ZIM Integrated go up and down completely randomly.

Pair Corralation between DFDS AS and ZIM Integrated

Assuming the 90 days horizon DFDS AS is expected to generate 0.73 times more return on investment than ZIM Integrated. However, DFDS AS is 1.37 times less risky than ZIM Integrated. It trades about -0.15 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about -0.16 per unit of risk. If you would invest  1,847  in DFDS AS on September 23, 2024 and sell it today you would lose (158.00) from holding DFDS AS or give up 8.55% of portfolio value over 90 days.

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

DFDS AS  vs.  ZIM Integrated Shipping

DFDS AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFDS AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ZIM Integrated Shipping

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ZIM Integrated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DFDS AS and ZIM Integrated

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

The idea behind DFDS AS and ZIM Integrated Shipping 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.