Correlation Between DAmico International and Caravelle International

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

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

Diversification Opportunities for DAmico International and Caravelle International

-0.85

Correlation Coefficient

DAmico International  Caravelle International

Pay attention - limited upside

The 3 months correlation between DAmico and Caravelle is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding dAmico International Shipping and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International and DAmico International 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 dAmico International Shipping are associated (or correlated) with Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of DAmico International i.e., DAmico International and Caravelle International go up and down completely randomly.

Pair Corralation between DAmico International and Caravelle International

Assuming the 90 days horizon dAmico International Shipping is expected to under-perform the Caravelle International. But the otc stock apears to be less risky and, when comparing its historical volatility, dAmico International Shipping is 6.78 times less risky than Caravelle International. The otc stock trades about -0.17 of its potential returns per unit of risk. The Caravelle International Group is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Caravelle International Group on September 26, 2024 and sell it today you would earn a total of  122.00  from holding Caravelle International Group or generate 93.13% return on investment over 90 days.

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

dAmico International Shipping  vs.  Caravelle International Group

dAmico International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dAmico International Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Caravelle International

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caravelle International Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Caravelle International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAmico International and Caravelle International

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

The idea behind dAmico International Shipping and Caravelle International Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.