Correlation Between MidCap Financial and COSCO SHIPPING

Can any of the company-specific risk be diversified away by investing in both MidCap Financial and COSCO SHIPPING 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 MidCap Financial and COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MidCap Financial Investment and COSCO SHIPPING Holdings, you can compare the effects of market volatilities on MidCap Financial and COSCO SHIPPING 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 MidCap Financial with a short position of COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and COSCO SHIPPING.

Diversification Opportunities for MidCap Financial and COSCO SHIPPING

-0.05

Correlation Coefficient

MidCap Financial  COSCO SHIPPING

Good diversification

The 3 months correlation between MidCap and COSCO is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and COSCO SHIPPING Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Holdings and MidCap Financial 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 MidCap Financial Investment are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Holdings has no effect on the direction of MidCap Financial i.e., MidCap Financial and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between MidCap Financial and COSCO SHIPPING

Assuming the 90 days trading horizon MidCap Financial is expected to generate 7.6 times less return on investment than COSCO SHIPPING. But when comparing it to its historical volatility, MidCap Financial Investment is 3.89 times less risky than COSCO SHIPPING. It trades about 0.06 of its potential returns per unit of risk. COSCO SHIPPING Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  46.00  in COSCO SHIPPING Holdings on October 8, 2024 and sell it today you would earn a total of  110.00  from holding COSCO SHIPPING Holdings or generate 239.13% return on investment over 90 days.

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

MidCap Financial Investment  vs.  COSCO SHIPPING Holdings

MidCap Financial Inv

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MidCap Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

COSCO SHIPPING Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSCO SHIPPING may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MidCap Financial and COSCO SHIPPING

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

The idea behind MidCap Financial Investment and COSCO SHIPPING Holdings 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.