Correlation Between Project Planning and Regional Container

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

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

Diversification Opportunities for Project Planning and Regional Container

-0.44

Correlation Coefficient

Project Planning  Regional Container

Very good diversification

The 3 months correlation between Project and Regional is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Project Planning Service 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 Project Planning 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 Project Planning Service 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 Project Planning i.e., Project Planning and Regional Container go up and down completely randomly.

Pair Corralation between Project Planning and Regional Container

Assuming the 90 days trading horizon Project Planning Service is expected to under-perform the Regional Container. But the stock apears to be less risky and, when comparing its historical volatility, Project Planning Service is 33.21 times less risky than Regional Container. The stock trades about -0.21 of its potential returns per unit of risk. The Regional Container Lines is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,408  in Regional Container Lines on September 23, 2024 and sell it today you would earn a total of  367.00  from holding Regional Container Lines or generate 15.24% return on investment over 90 days.

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

Project Planning Service  vs.  Regional Container Lines

Project Planning Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Project Planning Service 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 quite persistent which may send shares a bit higher in January 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 Project Planning and Regional Container

The main advantage of trading using opposite Project Planning and Regional Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Project Planning 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 Project Planning Service 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.