Correlation Between Global Ship and RELIANCE

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

Diversification Opportunities for Global Ship and RELIANCE

-0.35

Correlation Coefficient

Global Ship  RELIANCE

Very good diversification

The 3 months correlation between Global and RELIANCE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and RELIANCE STL ALUM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELIANCE STL ALUM 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 RELIANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELIANCE STL ALUM has no effect on the direction of Global Ship i.e., Global Ship and RELIANCE go up and down completely randomly.

Pair Corralation between Global Ship and RELIANCE

Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.32 times more return on investment than RELIANCE. However, Global Ship Lease is 3.17 times less risky than RELIANCE. It trades about 0.06 of its potential returns per unit of risk. RELIANCE STL ALUM is currently generating about -0.37 per unit of risk. If you would invest  2,582  in Global Ship Lease on September 29, 2024 and sell it today you would earn a total of  20.00  from holding Global Ship Lease or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.0%
Values	Daily Returns

Global Ship Lease  vs.  RELIANCE STL ALUM

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

RELIANCE STL ALUM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RELIANCE STL ALUM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for RELIANCE STL ALUM investors.

Pair Trading with Global Ship and RELIANCE

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

The idea behind Global Ship Lease and RELIANCE STL ALUM 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.