Correlation Between Hapag Lloyd and Qingdao Port

Can any of the company-specific risk be diversified away by investing in both Hapag Lloyd and Qingdao Port 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 Hapag Lloyd and Qingdao Port into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hapag Lloyd AG and Qingdao Port International, you can compare the effects of market volatilities on Hapag Lloyd and Qingdao Port 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 Hapag Lloyd with a short position of Qingdao Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hapag Lloyd and Qingdao Port.

Diversification Opportunities for Hapag Lloyd and Qingdao Port

-0.19

Correlation Coefficient

Hapag Lloyd  Qingdao Port

Good diversification

The 3 months correlation between Hapag and Qingdao is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd AG and Qingdao Port International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Port Interna and Hapag Lloyd 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 Hapag Lloyd AG are associated (or correlated) with Qingdao Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Port Interna has no effect on the direction of Hapag Lloyd i.e., Hapag Lloyd and Qingdao Port go up and down completely randomly.

Pair Corralation between Hapag Lloyd and Qingdao Port

Assuming the 90 days trading horizon Hapag Lloyd AG is expected to under-perform the Qingdao Port. In addition to that, Hapag Lloyd is 1.79 times more volatile than Qingdao Port International. It trades about -0.34 of its total potential returns per unit of risk. Qingdao Port International is currently generating about 0.06 per unit of volatility. If you would invest  72.00  in Qingdao Port International on October 24, 2024 and sell it today you would earn a total of  1.00  from holding Qingdao Port International or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Hapag Lloyd AG  vs.  Qingdao Port International

Hapag Lloyd AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hapag Lloyd AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Qingdao Port Interna

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Port International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Qingdao Port reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hapag Lloyd and Qingdao Port

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

The idea behind Hapag Lloyd AG and Qingdao Port International 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.