Correlation Between Pacific Basin and T-MOBILE

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

By analyzing existing cross correlation between Pacific Basin Shipping and T MOBILE US, you can compare the effects of market volatilities on Pacific Basin and T-MOBILE 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 Pacific Basin with a short position of T-MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and T-MOBILE.

Diversification Opportunities for Pacific Basin and T-MOBILE

-0.21

Correlation Coefficient

Pacific Basin  T-MOBILE

Very good diversification

The 3 months correlation between Pacific and T-MOBILE is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and T MOBILE US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE US and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with T-MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE US has no effect on the direction of Pacific Basin i.e., Pacific Basin and T-MOBILE go up and down completely randomly.

Pair Corralation between Pacific Basin and T-MOBILE

Assuming the 90 days horizon Pacific Basin is expected to generate 3.61 times less return on investment than T-MOBILE. In addition to that, Pacific Basin is 1.65 times more volatile than T MOBILE US. It trades about 0.02 of its total potential returns per unit of risk. T MOBILE US is currently generating about 0.1 per unit of volatility. If you would invest  21,246  in T MOBILE US on December 23, 2024 and sell it today you would earn a total of  2,389  from holding T MOBILE US or generate 11.24% return on investment over 90 days.

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

Pacific Basin Shipping  vs.  T MOBILE US

Pacific Basin Shipping

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Basin Shipping are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Pacific Basin is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

T MOBILE US

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T-MOBILE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pacific Basin and T-MOBILE

The main advantage of trading using opposite Pacific Basin and T-MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Basin position performs unexpectedly, T-MOBILE 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 T-MOBILE will offset losses from the drop in T-MOBILE's long position.

The idea behind Pacific Basin Shipping and T MOBILE US 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.