Correlation Between Carlton Investments and Steamships Trading

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

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

Diversification Opportunities for Carlton Investments and Steamships Trading

-0.45

Correlation Coefficient

Carlton Investments  Steamships Trading

Very good diversification

The 3 months correlation between Carlton and Steamships is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and Steamships Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steamships Trading and Carlton Investments 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 Carlton Investments are associated (or correlated) with Steamships Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steamships Trading has no effect on the direction of Carlton Investments i.e., Carlton Investments and Steamships Trading go up and down completely randomly.

Pair Corralation between Carlton Investments and Steamships Trading

Assuming the 90 days trading horizon Carlton Investments is expected to generate 5.36 times more return on investment than Steamships Trading. However, Carlton Investments is 5.36 times more volatile than Steamships Trading. It trades about -0.02 of its potential returns per unit of risk. Steamships Trading is currently generating about -0.23 per unit of risk. If you would invest  3,100  in Carlton Investments on October 1, 2024 and sell it today you would lose (12.00) from holding Carlton Investments or give up 0.39% of portfolio value over 90 days.

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

Carlton Investments  vs.  Steamships Trading

Carlton Investments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Steamships Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steamships Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Steamships Trading is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Carlton Investments and Steamships Trading

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

The idea behind Carlton Investments and Steamships Trading 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.