Correlation Between First Ship and ICC Holdings

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

By analyzing existing cross correlation between First Ship Lease and ICC Holdings, you can compare the effects of market volatilities on First Ship and ICC Holdings 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 First Ship with a short position of ICC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ship and ICC Holdings.

Diversification Opportunities for First Ship and ICC Holdings

0.0

Correlation Coefficient

First Ship  ICC Holdings

Pay attention - limited upside

The 3 months correlation between First and ICC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Ship Lease and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC Holdings and First Ship 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 First Ship Lease are associated (or correlated) with ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of First Ship i.e., First Ship and ICC Holdings go up and down completely randomly.

Pair Corralation between First Ship and ICC Holdings

Assuming the 90 days horizon First Ship is expected to generate 19.58 times less return on investment than ICC Holdings. But when comparing it to its historical volatility, First Ship Lease is 18.7 times less risky than ICC Holdings. It trades about 0.05 of its potential returns per unit of risk. ICC Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,571  in ICC Holdings on December 3, 2024 and sell it today you would earn a total of  715.00  from holding ICC Holdings or generate 45.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	80.36%
Values	Daily Returns

First Ship Lease  vs.  ICC Holdings

First Ship Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, First Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ICC Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Ship and ICC Holdings

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

The idea behind First Ship Lease and ICC Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..