Correlation Between Global Ship and National CineMedia

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

Diversification Opportunities for Global Ship and National CineMedia

0.04

Correlation Coefficient

Global Ship  National CineMedia

Significant diversification

The 3 months correlation between Global and National is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Global Ship i.e., Global Ship and National CineMedia go up and down completely randomly.

Pair Corralation between Global Ship and National CineMedia

Assuming the 90 days trading horizon Global Ship is expected to generate 4.3 times less return on investment than National CineMedia. But when comparing it to its historical volatility, Global Ship Lease is 3.25 times less risky than National CineMedia. It trades about 0.21 of its potential returns per unit of risk. National CineMedia is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  676.00  in National CineMedia on September 13, 2024 and sell it today you would earn a total of  69.00  from holding National CineMedia or generate 10.21% return on investment over 90 days.

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

Global Ship Lease  vs.  National CineMedia

Global Ship Lease

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 5 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

National CineMedia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting primary indicators, National CineMedia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Ship and National CineMedia

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

The idea behind Global Ship Lease and National CineMedia 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.