Correlation Between Global Ship and DigiAsia Corp

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

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

Diversification Opportunities for Global Ship and DigiAsia Corp

0.14

Correlation Coefficient

Global Ship  DigiAsia Corp

Average diversification

The 3 months correlation between Global and DigiAsia is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and DigiAsia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiAsia Corp and Global 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 Global Ship Lease are associated (or correlated) with DigiAsia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiAsia Corp has no effect on the direction of Global Ship i.e., Global Ship and DigiAsia Corp go up and down completely randomly.

Pair Corralation between Global Ship and DigiAsia Corp

Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.07 times more return on investment than DigiAsia Corp. However, Global Ship Lease is 13.95 times less risky than DigiAsia Corp. It trades about 0.06 of its potential returns per unit of risk. DigiAsia Corp is currently generating about -0.08 per unit of risk. If you would invest  2,136  in Global Ship Lease on September 20, 2024 and sell it today you would earn a total of  537.00  from holding Global Ship Lease or generate 25.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	37.17%
Values	Daily Returns

Global Ship Lease  vs.  DigiAsia Corp

Global Ship Lease

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DigiAsia Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigiAsia Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Global Ship and DigiAsia Corp

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

The idea behind Global Ship Lease and DigiAsia Corp 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.