Correlation Between Information and Regional Container

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

By analyzing existing cross correlation between Information and Communication and Regional Container Lines, you can compare the effects of market volatilities on Information and Regional Container 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 Information with a short position of Regional Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information and Regional Container.

Diversification Opportunities for Information and Regional Container

-0.41

Correlation Coefficient

Information  Regional Container

Very good diversification

The 3 months correlation between Information and Regional is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Information and Communication and Regional Container Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Container Lines and Information 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 Information and Communication are associated (or correlated) with Regional Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Container Lines has no effect on the direction of Information i.e., Information and Regional Container go up and down completely randomly.

Pair Corralation between Information and Regional Container

Assuming the 90 days trading horizon Information and Communication is expected to under-perform the Regional Container. In addition to that, Information is 1.15 times more volatile than Regional Container Lines. It trades about -0.38 of its total potential returns per unit of risk. Regional Container Lines is currently generating about -0.1 per unit of volatility. If you would invest  2,875  in Regional Container Lines on October 11, 2024 and sell it today you would lose (50.00) from holding Regional Container Lines or give up 1.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Information and Communication  vs.  Regional Container Lines

Information and Comm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Information and Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Regional Container Lines

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Container Lines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Regional Container sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Information and Regional Container

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

The idea behind Information and Communication and Regional Container Lines 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 Anywhere module to track or share privately all of your investments from the convenience of any device.