Correlation Between MPC Container and ZIM Integrated

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Can any of the company-specific risk be diversified away by investing in both MPC Container and ZIM Integrated 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 ZIM Integrated 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 ZIM Integrated Shipping, you can compare the effects of market volatilities on MPC Container and ZIM Integrated 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 ZIM Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPC Container and ZIM Integrated.

Diversification Opportunities for MPC Container and ZIM Integrated

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between MPC and ZIM is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding MPC Container Ships and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of MPC Container i.e., MPC Container and ZIM Integrated go up and down completely randomly.

Pair Corralation between MPC Container and ZIM Integrated

Assuming the 90 days horizon MPC Container Ships is expected to generate 3.78 times more return on investment than ZIM Integrated. However, MPC Container is 3.78 times more volatile than ZIM Integrated Shipping. It trades about 0.08 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.06 per unit of risk. If you would invest  82.00  in MPC Container Ships on October 10, 2024 and sell it today you would earn a total of  99.00  from holding MPC Container Ships or generate 120.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.19%
ValuesDaily Returns

MPC Container Ships  vs.  ZIM Integrated Shipping

 Performance 
       Timeline  
MPC Container Ships 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
ZIM Integrated Shipping 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, ZIM Integrated displayed solid returns over the last few months and may actually be approaching a breakup point.

MPC Container and ZIM Integrated Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MPC Container and ZIM Integrated

The main advantage of trading using opposite MPC Container and ZIM Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPC Container position performs unexpectedly, ZIM Integrated 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 ZIM Integrated will offset losses from the drop in ZIM Integrated's long position.
The idea behind MPC Container Ships and ZIM Integrated Shipping 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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