Correlation Between CPLP Old and American Shipping

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

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

Diversification Opportunities for CPLP Old and American Shipping

0.4

Correlation Coefficient

CPLP Old  American Shipping

Very weak diversification

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

Pair Corralation between CPLP Old and American Shipping

If you would invest (100.00) in CPLP Old on October 11, 2024 and sell it today you would earn a total of  100.00  from holding CPLP Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

CPLP Old  vs.  American Shipping

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.

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.

Pair Trading with CPLP Old and American Shipping

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

The idea behind CPLP Old and American Shipping 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.