Correlation Between SIDETRADE and SHIP HEALTHCARE

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

By analyzing existing cross correlation between SIDETRADE EO 1 and SHIP HEALTHCARE HLDGINC, you can compare the effects of market volatilities on SIDETRADE and SHIP HEALTHCARE 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 SIDETRADE with a short position of SHIP HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and SHIP HEALTHCARE.

Diversification Opportunities for SIDETRADE and SHIP HEALTHCARE

-0.33

Correlation Coefficient

SIDETRADE  SHIP HEALTHCARE

Very good diversification

The 3 months correlation between SIDETRADE and SHIP is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and SHIP HEALTHCARE HLDGINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIP HEALTHCARE HLDGINC and SIDETRADE 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 SIDETRADE EO 1 are associated (or correlated) with SHIP HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIP HEALTHCARE HLDGINC has no effect on the direction of SIDETRADE i.e., SIDETRADE and SHIP HEALTHCARE go up and down completely randomly.

Pair Corralation between SIDETRADE and SHIP HEALTHCARE

Assuming the 90 days horizon SIDETRADE EO 1 is expected to under-perform the SHIP HEALTHCARE. In addition to that, SIDETRADE is 1.25 times more volatile than SHIP HEALTHCARE HLDGINC. It trades about -0.04 of its total potential returns per unit of risk. SHIP HEALTHCARE HLDGINC is currently generating about 0.01 per unit of volatility. If you would invest  1,330  in SHIP HEALTHCARE HLDGINC on September 27, 2024 and sell it today you would earn a total of  0.00  from holding SHIP HEALTHCARE HLDGINC or generate 0.0% return on investment over 90 days.

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

SIDETRADE EO 1  vs.  SHIP HEALTHCARE HLDGINC

SIDETRADE EO 1

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days SIDETRADE EO 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SIDETRADE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with SIDETRADE and SHIP HEALTHCARE

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

The idea behind SIDETRADE EO 1 and SHIP HEALTHCARE HLDGINC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.