Correlation Between Global Ship and Custom Truck

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

Diversification Opportunities for Global Ship and Custom Truck

-0.21

Correlation Coefficient

Global Ship  Custom Truck

Very good diversification

The 3 months correlation between Global and Custom is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One 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 Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of Global Ship i.e., Global Ship and Custom Truck go up and down completely randomly.

Pair Corralation between Global Ship and Custom Truck

Considering the 90-day investment horizon Global Ship Lease is expected to generate 0.42 times more return on investment than Custom Truck. However, Global Ship Lease is 2.4 times less risky than Custom Truck. It trades about 0.08 of its potential returns per unit of risk. Custom Truck One is currently generating about -0.01 per unit of risk. If you would invest  2,127  in Global Ship Lease on December 28, 2024 and sell it today you would earn a total of  181.00  from holding Global Ship Lease or generate 8.51% return on investment over 90 days.

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

Global Ship Lease  vs.  Custom Truck One

Global Ship Lease

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Custom Truck One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Custom Truck One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Custom Truck is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Global Ship and Custom Truck

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

The idea behind Global Ship Lease and Custom Truck One 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.