Correlation Between First Ship and Banco Ita

Can any of the company-specific risk be diversified away by investing in both First Ship and Banco Ita 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 Banco Ita 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 Banco Ita Chile, you can compare the effects of market volatilities on First Ship and Banco Ita 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 Banco Ita. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ship and Banco Ita.

Diversification Opportunities for First Ship and Banco Ita

0.0

Correlation Coefficient

First Ship  Banco Ita

Pay attention - limited upside

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

Pair Corralation between First Ship and Banco Ita

If you would invest (100.00) in Banco Ita Chile on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Banco Ita Chile or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

First Ship Lease  vs.  Banco Ita Chile

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Banco Ita Chile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Ita Chile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Banco Ita is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First Ship and Banco Ita

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

The idea behind First Ship Lease and Banco Ita Chile 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.