Correlation Between ZIM Integrated and Clarkson PLC

Can any of the company-specific risk be diversified away by investing in both ZIM Integrated and Clarkson PLC 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 Clarkson PLC 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 Clarkson PLC, you can compare the effects of market volatilities on ZIM Integrated and Clarkson PLC 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 Clarkson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZIM Integrated and Clarkson PLC.

Diversification Opportunities for ZIM Integrated and Clarkson PLC

0.12

Correlation Coefficient

ZIM Integrated  Clarkson PLC

Average diversification

The 3 months correlation between ZIM and Clarkson is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ZIM Integrated Shipping and Clarkson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkson PLC 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 Clarkson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkson PLC has no effect on the direction of ZIM Integrated i.e., ZIM Integrated and Clarkson PLC go up and down completely randomly.

Pair Corralation between ZIM Integrated and Clarkson PLC

Assuming the 90 days horizon ZIM Integrated is expected to generate 5.45 times less return on investment than Clarkson PLC. In addition to that, ZIM Integrated is 2.33 times more volatile than Clarkson PLC. It trades about 0.01 of its total potential returns per unit of risk. Clarkson PLC is currently generating about 0.16 per unit of volatility. If you would invest  4,180  in Clarkson PLC on September 23, 2024 and sell it today you would earn a total of  580.00  from holding Clarkson PLC or generate 13.88% return on investment over 90 days.

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

ZIM Integrated Shipping  vs.  Clarkson PLC

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.

Clarkson PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clarkson PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clarkson PLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ZIM Integrated and Clarkson PLC

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

The idea behind ZIM Integrated Shipping and Clarkson PLC 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 Stocks Directory module to find actively traded stocks across global markets.