Correlation Between SGF Capital and Regional Container

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

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

Diversification Opportunities for SGF Capital and Regional Container

-0.53

Correlation Coefficient

SGF Capital  Regional Container

Excellent diversification

The 3 months correlation between SGF and Regional is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SGF Capital 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 SGF Capital 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 SGF Capital 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 SGF Capital i.e., SGF Capital and Regional Container go up and down completely randomly.

Pair Corralation between SGF Capital and Regional Container

Assuming the 90 days trading horizon SGF Capital is expected to generate 2.29 times less return on investment than Regional Container. But when comparing it to its historical volatility, SGF Capital Public is 1.41 times less risky than Regional Container. It trades about 0.04 of its potential returns per unit of risk. Regional Container Lines is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,150  in Regional Container Lines on October 12, 2024 and sell it today you would lose (450.00) from holding Regional Container Lines or give up 14.29% of portfolio value over 90 days.

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

SGF Capital Public  vs.  Regional Container Lines

SGF Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGF Capital Public 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 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 SGF Capital and Regional Container

The main advantage of trading using opposite SGF Capital and Regional Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGF Capital 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 SGF Capital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.