Correlation Between American Shipping and CPLP Old

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

By analyzing existing cross correlation between American Shipping and CPLP Old, you can compare the effects of market volatilities on American Shipping and CPLP Old 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 American Shipping with a short position of CPLP Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Shipping and CPLP Old.

Diversification Opportunities for American Shipping and CPLP Old

0.4

Correlation Coefficient

American Shipping  CPLP Old

Very weak diversification

The 3 months correlation between American and CPLP is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding American Shipping and CPLP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPLP Old and American Shipping 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 American Shipping are associated (or correlated) with CPLP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPLP Old has no effect on the direction of American Shipping i.e., American Shipping and CPLP Old go up and down completely randomly.

Pair Corralation between American Shipping and CPLP Old

Assuming the 90 days horizon American Shipping is expected to generate 9.82 times more return on investment than CPLP Old. However, American Shipping is 9.82 times more volatile than CPLP Old. It trades about 0.17 of its potential returns per unit of risk. CPLP Old is currently generating about -0.03 per unit of risk. If you would invest  143.00  in American Shipping on October 11, 2024 and sell it today you would earn a total of  82.00  from holding American Shipping or generate 57.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.79%
Values	Daily Returns

American Shipping  vs.  CPLP Old

American Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CPLP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPLP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, CPLP Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with American Shipping and CPLP Old

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

The idea behind American Shipping and CPLP Old 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.