Correlation Between Overseas Commerce and Big Shopping

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

By analyzing existing cross correlation between Overseas Commerce and Big Shopping Centers, you can compare the effects of market volatilities on Overseas Commerce and Big Shopping 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 Overseas Commerce with a short position of Big Shopping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overseas Commerce and Big Shopping.

Diversification Opportunities for Overseas Commerce and Big Shopping

0.51

Correlation Coefficient

Overseas Commerce  Big Shopping

Very weak diversification

The 3 months correlation between Overseas and Big is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Commerce and Big Shopping Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Shopping Centers and Overseas Commerce 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 Overseas Commerce are associated (or correlated) with Big Shopping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Shopping Centers has no effect on the direction of Overseas Commerce i.e., Overseas Commerce and Big Shopping go up and down completely randomly.

Pair Corralation between Overseas Commerce and Big Shopping

Assuming the 90 days trading horizon Overseas Commerce is expected to generate 0.89 times more return on investment than Big Shopping. However, Overseas Commerce is 1.13 times less risky than Big Shopping. It trades about 0.16 of its potential returns per unit of risk. Big Shopping Centers is currently generating about -0.05 per unit of risk. If you would invest  39,670  in Overseas Commerce on December 29, 2024 and sell it today you would earn a total of  4,690  from holding Overseas Commerce or generate 11.82% return on investment over 90 days.

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

Overseas Commerce  vs.  Big Shopping Centers

Overseas Commerce

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Overseas Commerce are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Overseas Commerce sustained solid returns over the last few months and may actually be approaching a breakup point.

Big Shopping Centers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Shopping Centers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Big Shopping is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Overseas Commerce and Big Shopping

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

The idea behind Overseas Commerce and Big Shopping Centers 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.