Correlation Between Alexander Marine and Topkey Corp

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

By analyzing existing cross correlation between Alexander Marine Co and Topkey Corp, you can compare the effects of market volatilities on Alexander Marine and Topkey Corp 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 Alexander Marine with a short position of Topkey Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexander Marine and Topkey Corp.

Diversification Opportunities for Alexander Marine and Topkey Corp

0.79

Correlation Coefficient

Alexander Marine  Topkey Corp

Poor diversification

The 3 months correlation between Alexander and Topkey is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alexander Marine Co and Topkey Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topkey Corp and Alexander Marine 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 Alexander Marine Co are associated (or correlated) with Topkey Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topkey Corp has no effect on the direction of Alexander Marine i.e., Alexander Marine and Topkey Corp go up and down completely randomly.

Pair Corralation between Alexander Marine and Topkey Corp

Assuming the 90 days trading horizon Alexander Marine Co is expected to under-perform the Topkey Corp. But the stock apears to be less risky and, when comparing its historical volatility, Alexander Marine Co is 1.01 times less risky than Topkey Corp. The stock trades about -0.27 of its potential returns per unit of risk. The Topkey Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  22,600  in Topkey Corp on September 19, 2024 and sell it today you would lose (2,950) from holding Topkey Corp or give up 13.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Alexander Marine Co  vs.  Topkey Corp

Alexander Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexander Marine Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Topkey Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Topkey Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Alexander Marine and Topkey Corp

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

The idea behind Alexander Marine Co and Topkey Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..