Correlation Between Global Ship and ZIM Integrated

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

Diversification Opportunities for Global Ship and ZIM Integrated

0.7

Correlation Coefficient

Global Ship  ZIM Integrated

Poor diversification

The 3 months correlation between Global and ZIM is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of Global Ship i.e., Global Ship and ZIM Integrated go up and down completely randomly.

Pair Corralation between Global Ship and ZIM Integrated

Considering the 90-day investment horizon Global Ship is expected to generate 3.15 times less return on investment than ZIM Integrated. But when comparing it to its historical volatility, Global Ship Lease is 2.8 times less risky than ZIM Integrated. It trades about 0.02 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,981  in ZIM Integrated Shipping on December 2, 2024 and sell it today you would earn a total of  41.00  from holding ZIM Integrated Shipping or generate 2.07% return on investment over 90 days.

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

Global Ship Lease  vs.  ZIM Integrated Shipping

Global Ship Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Global Ship is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

ZIM Integrated Shipping

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, ZIM Integrated may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Global Ship and ZIM Integrated

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

The idea behind Global Ship Lease and ZIM Integrated Shipping 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..