Correlation Between SITC International and Hapag Lloyd

Can any of the company-specific risk be diversified away by investing in both SITC International and Hapag Lloyd 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 SITC International and Hapag Lloyd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SITC International Holdings and Hapag Lloyd Aktiengesellschaft, you can compare the effects of market volatilities on SITC International and Hapag Lloyd 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 SITC International with a short position of Hapag Lloyd. Check out your portfolio center. Please also check ongoing floating volatility patterns of SITC International and Hapag Lloyd.

Diversification Opportunities for SITC International and Hapag Lloyd

0.68

Correlation Coefficient

SITC International  Hapag Lloyd

Poor diversification

The 3 months correlation between SITC and Hapag is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SITC International Holdings and Hapag Lloyd Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapag Lloyd Aktienge and SITC International 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 SITC International Holdings are associated (or correlated) with Hapag Lloyd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapag Lloyd Aktienge has no effect on the direction of SITC International i.e., SITC International and Hapag Lloyd go up and down completely randomly.

Pair Corralation between SITC International and Hapag Lloyd

Assuming the 90 days horizon SITC International Holdings is expected to generate 2.31 times more return on investment than Hapag Lloyd. However, SITC International is 2.31 times more volatile than Hapag Lloyd Aktiengesellschaft. It trades about 0.05 of its potential returns per unit of risk. Hapag Lloyd Aktiengesellschaft is currently generating about 0.04 per unit of risk. If you would invest  2,227  in SITC International Holdings on September 3, 2024 and sell it today you would earn a total of  188.00  from holding SITC International Holdings or generate 8.44% return on investment over 90 days.

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

SITC International Holdings  vs.  Hapag Lloyd Aktiengesellschaft

SITC International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SITC International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, SITC International showed solid returns over the last few months and may actually be approaching a breakup point.

Hapag Lloyd Aktienge

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd Aktiengesellschaft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Hapag Lloyd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SITC International and Hapag Lloyd

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

The idea behind SITC International Holdings and Hapag Lloyd Aktiengesellschaft 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.