Correlation Between First Ship and Talon 1

Can any of the company-specific risk be diversified away by investing in both First Ship and Talon 1 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 Talon 1 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 Talon 1 Acquisition, you can compare the effects of market volatilities on First Ship and Talon 1 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 Talon 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ship and Talon 1.

Diversification Opportunities for First Ship and Talon 1

0.0

Correlation Coefficient

First Ship  Talon 1

Pay attention - limited upside

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

Pair Corralation between First Ship and Talon 1

If you would invest  0.21  in Talon 1 Acquisition on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Talon 1 Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

First Ship Lease  vs.  Talon 1 Acquisition

First Ship Lease

Risk-Adjusted Performance

0 of 100

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.

Talon 1 Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talon 1 Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Talon 1 is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Ship and Talon 1

The main advantage of trading using opposite First Ship and Talon 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Ship position performs unexpectedly, Talon 1 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 Talon 1 will offset losses from the drop in Talon 1's long position.

The idea behind First Ship Lease and Talon 1 Acquisition 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.