Correlation Between MPC Container and COSCO SHIPPING

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

By analyzing existing cross correlation between MPC Container Ships and COSCO SHIPPING Holdings, you can compare the effects of market volatilities on MPC Container 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 MPC Container with a short position of COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPC Container and COSCO SHIPPING.

Diversification Opportunities for MPC Container and COSCO SHIPPING

0.34

Correlation Coefficient

MPC Container  COSCO SHIPPING

Weak diversification

The 3 months correlation between MPC and COSCO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MPC Container Ships 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 MPC Container 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 MPC Container Ships 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 MPC Container i.e., MPC Container and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between MPC Container and COSCO SHIPPING

Assuming the 90 days horizon MPC Container Ships is expected to under-perform the COSCO SHIPPING. But the pink sheet apears to be less risky and, when comparing its historical volatility, MPC Container Ships is 1.62 times less risky than COSCO SHIPPING. The pink sheet trades about -0.05 of its potential returns per unit of risk. The COSCO SHIPPING Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  164.00  in COSCO SHIPPING Holdings on December 24, 2024 and sell it today you would lose (10.00) from holding COSCO SHIPPING Holdings or give up 6.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.53%
Values	Daily Returns

MPC Container Ships  vs.  COSCO SHIPPING Holdings

MPC Container Ships

Risk-Adjusted Performance

Very Weak

Over the last 90 days MPC Container Ships has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

COSCO SHIPPING Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days COSCO SHIPPING Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COSCO SHIPPING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MPC Container and COSCO SHIPPING

The main advantage of trading using opposite MPC Container and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPC Container 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 MPC Container Ships 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.