Correlation Between Hapag-Lloyd and COSCO SHIPPING

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

Diversification Opportunities for Hapag-Lloyd and COSCO SHIPPING

0.01

Correlation Coefficient

Hapag-Lloyd  COSCO SHIPPING

Significant diversification

The 3 months correlation between Hapag-Lloyd and COSCO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd AG and COSCO SHIPPING Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Holdings 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Holdings has no effect on the direction of Hapag-Lloyd i.e., Hapag-Lloyd and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Hapag-Lloyd and COSCO SHIPPING

Assuming the 90 days trading horizon Hapag Lloyd AG is expected to under-perform the COSCO SHIPPING. But the stock apears to be less risky and, when comparing its historical volatility, Hapag Lloyd AG is 2.12 times less risky than COSCO SHIPPING. The stock trades about -0.01 of its potential returns per unit of risk. The COSCO SHIPPING Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  102.00  in COSCO SHIPPING Holdings on September 26, 2024 and sell it today you would earn a total of  47.00  from holding COSCO SHIPPING Holdings or generate 46.08% return on investment over 90 days.

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

Hapag Lloyd AG  vs.  COSCO SHIPPING Holdings

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 nearly stable basic indicators, Hapag-Lloyd is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

COSCO SHIPPING Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSCO SHIPPING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hapag-Lloyd and COSCO SHIPPING

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

The idea behind Hapag Lloyd AG and COSCO SHIPPING Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.