Correlation Between SHIP HEALTHCARE and G8 EDUCATION

Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE and G8 EDUCATION 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 SHIP HEALTHCARE and G8 EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and G8 EDUCATION, you can compare the effects of market volatilities on SHIP HEALTHCARE and G8 EDUCATION 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 SHIP HEALTHCARE with a short position of G8 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and G8 EDUCATION.

Diversification Opportunities for SHIP HEALTHCARE and G8 EDUCATION

0.63

Correlation Coefficient

SHIP HEALTHCARE  G8 EDUCATION

Poor diversification

The 3 months correlation between SHIP and 3EAG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and G8 EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 EDUCATION and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with G8 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 EDUCATION has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and G8 EDUCATION go up and down completely randomly.

Pair Corralation between SHIP HEALTHCARE and G8 EDUCATION

Assuming the 90 days horizon SHIP HEALTHCARE is expected to generate 2.72 times less return on investment than G8 EDUCATION. But when comparing it to its historical volatility, SHIP HEALTHCARE HLDGINC is 1.1 times less risky than G8 EDUCATION. It trades about 0.01 of its potential returns per unit of risk. G8 EDUCATION is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  77.00  in G8 EDUCATION on October 3, 2024 and sell it today you would earn a total of  1.00  from holding G8 EDUCATION or generate 1.3% return on investment over 90 days.

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

SHIP HEALTHCARE HLDGINC  vs.  G8 EDUCATION

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIP HEALTHCARE HLDGINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SHIP HEALTHCARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

G8 EDUCATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SHIP HEALTHCARE and G8 EDUCATION

The main advantage of trading using opposite SHIP HEALTHCARE and G8 EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE position performs unexpectedly, G8 EDUCATION 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 G8 EDUCATION will offset losses from the drop in G8 EDUCATION's long position.

The idea behind SHIP HEALTHCARE HLDGINC and G8 EDUCATION 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.