Correlation Between Hapag-Lloyd and Liaoning Port

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

Diversification Opportunities for Hapag-Lloyd and Liaoning Port

0.02

Correlation Coefficient

Hapag-Lloyd  Liaoning Port

Significant diversification

The 3 months correlation between Hapag-Lloyd and Liaoning is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd AG and Liaoning Port CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Port CoLtd 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 Liaoning Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Port CoLtd has no effect on the direction of Hapag-Lloyd i.e., Hapag-Lloyd and Liaoning Port go up and down completely randomly.

Pair Corralation between Hapag-Lloyd and Liaoning Port

Assuming the 90 days trading horizon Hapag Lloyd AG is expected to generate 1.22 times more return on investment than Liaoning Port. However, Hapag-Lloyd is 1.22 times more volatile than Liaoning Port CoLtd. It trades about 0.02 of its potential returns per unit of risk. Liaoning Port CoLtd is currently generating about -0.04 per unit of risk. If you would invest  15,530  in Hapag Lloyd AG on September 27, 2024 and sell it today you would earn a total of  60.00  from holding Hapag Lloyd AG or generate 0.39% 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.  Liaoning Port CoLtd

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.

Liaoning Port CoLtd

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Liaoning Port CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Liaoning Port may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hapag-Lloyd and Liaoning Port

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

The idea behind Hapag Lloyd AG and Liaoning Port CoLtd 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..