Correlation Between Stolt Nielsen and Hapag Lloyd

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

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

Diversification Opportunities for Stolt Nielsen and Hapag Lloyd

-0.49

Correlation Coefficient

Stolt Nielsen  Hapag Lloyd

Very good diversification

The 3 months correlation between Stolt and Hapag is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited 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 Stolt Nielsen 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 Stolt Nielsen Limited 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 Stolt Nielsen i.e., Stolt Nielsen and Hapag Lloyd go up and down completely randomly.

Pair Corralation between Stolt Nielsen and Hapag Lloyd

Assuming the 90 days horizon Stolt Nielsen Limited is expected to under-perform the Hapag Lloyd. In addition to that, Stolt Nielsen is 1.16 times more volatile than Hapag Lloyd Aktiengesellschaft. It trades about -0.04 of its total potential returns per unit of risk. Hapag Lloyd Aktiengesellschaft is currently generating about -0.02 per unit of volatility. If you would invest  7,875  in Hapag Lloyd Aktiengesellschaft on December 19, 2024 and sell it today you would lose (333.00) from holding Hapag Lloyd Aktiengesellschaft or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.67%
Values	Daily Returns

Stolt Nielsen Limited  vs.  Hapag Lloyd Aktiengesellschaft

Stolt Nielsen Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stolt Nielsen Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hapag Lloyd Aktienge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hapag Lloyd Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Hapag Lloyd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stolt Nielsen and Hapag Lloyd

The main advantage of trading using opposite Stolt Nielsen and Hapag Lloyd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stolt Nielsen 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 Stolt Nielsen Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..