Correlation Between Precious Shipping and Regional Container

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

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

Diversification Opportunities for Precious Shipping and Regional Container

0.35

Correlation Coefficient

Precious Shipping  Regional Container

Weak diversification

The 3 months correlation between Precious and Regional is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Precious Shipping Public 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 Precious Shipping 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 Precious Shipping Public 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 Precious Shipping i.e., Precious Shipping and Regional Container go up and down completely randomly.

Pair Corralation between Precious Shipping and Regional Container

Assuming the 90 days trading horizon Precious Shipping Public is expected to generate 0.99 times more return on investment than Regional Container. However, Precious Shipping Public is 1.01 times less risky than Regional Container. It trades about -0.02 of its potential returns per unit of risk. Regional Container Lines is currently generating about -0.09 per unit of risk. If you would invest  675.00  in Precious Shipping Public on December 29, 2024 and sell it today you would lose (35.00) from holding Precious Shipping Public or give up 5.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Precious Shipping Public  vs.  Regional Container Lines

Precious Shipping Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Precious Shipping Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Precious Shipping is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Regional Container Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regional Container Lines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Precious Shipping and Regional Container

The main advantage of trading using opposite Precious Shipping and Regional Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Shipping 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 Precious Shipping Public 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .