Correlation Between Hapag-Lloyd and HAMMONIA Schiffsholding

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

Diversification Opportunities for Hapag-Lloyd and HAMMONIA Schiffsholding

0.24

Correlation Coefficient

Hapag-Lloyd  HAMMONIA Schiffsholding

Modest diversification

The 3 months correlation between Hapag-Lloyd and HAMMONIA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd AG and HAMMONIA Schiffsholding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAMMONIA Schiffsholding 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 HAMMONIA Schiffsholding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAMMONIA Schiffsholding has no effect on the direction of Hapag-Lloyd i.e., Hapag-Lloyd and HAMMONIA Schiffsholding go up and down completely randomly.

Pair Corralation between Hapag-Lloyd and HAMMONIA Schiffsholding

Assuming the 90 days trading horizon Hapag Lloyd AG is expected to generate 0.74 times more return on investment than HAMMONIA Schiffsholding. However, Hapag Lloyd AG is 1.36 times less risky than HAMMONIA Schiffsholding. It trades about -0.05 of its potential returns per unit of risk. HAMMONIA Schiffsholding AG is currently generating about -0.09 per unit of risk. If you would invest  15,350  in Hapag Lloyd AG on September 25, 2024 and sell it today you would lose (380.00) from holding Hapag Lloyd AG or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Hapag Lloyd AG  vs.  HAMMONIA Schiffsholding AG

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.

HAMMONIA Schiffsholding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HAMMONIA Schiffsholding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HAMMONIA Schiffsholding is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hapag-Lloyd and HAMMONIA Schiffsholding

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

The idea behind Hapag Lloyd AG and HAMMONIA Schiffsholding AG 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 Global Correlations module to find global opportunities by holding instruments from different markets.