Correlation Between Regional Container and Samart Public

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

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

Diversification Opportunities for Regional Container and Samart Public

0.02

Correlation Coefficient

Regional Container  Samart Public

Significant diversification

The 3 months correlation between Regional and Samart is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Samart Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Public and Regional 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 Regional Container Lines are associated (or correlated) with Samart Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Public has no effect on the direction of Regional Container i.e., Regional Container and Samart Public go up and down completely randomly.

Pair Corralation between Regional Container and Samart Public

Assuming the 90 days trading horizon Regional Container Lines is expected to under-perform the Samart Public. In addition to that, Regional Container is 1.25 times more volatile than Samart Public. It trades about -0.07 of its total potential returns per unit of risk. Samart Public is currently generating about -0.08 per unit of volatility. If you would invest  730.00  in Samart Public on December 1, 2024 and sell it today you would lose (65.00) from holding Samart Public or give up 8.9% of portfolio value over 90 days.

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

Regional Container Lines  vs.  Samart Public

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 latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Samart Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samart Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Regional Container and Samart Public

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

The idea behind Regional Container Lines and Samart Public 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.