Correlation Between United Maritime and Torm PLC
Can any of the company-specific risk be diversified away by investing in both United Maritime and Torm PLC 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 United Maritime and Torm PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Maritime and Torm PLC Class, you can compare the effects of market volatilities on United Maritime and Torm PLC 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 United Maritime with a short position of Torm PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Maritime and Torm PLC.
Diversification Opportunities for United Maritime and Torm PLC
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Torm is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding United Maritime and Torm PLC Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torm PLC Class and United Maritime 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 United Maritime are associated (or correlated) with Torm PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torm PLC Class has no effect on the direction of United Maritime i.e., United Maritime and Torm PLC go up and down completely randomly.
Pair Corralation between United Maritime and Torm PLC
Given the investment horizon of 90 days United Maritime is expected to under-perform the Torm PLC. But the stock apears to be less risky and, when comparing its historical volatility, United Maritime is 1.09 times less risky than Torm PLC. The stock trades about -0.02 of its potential returns per unit of risk. The Torm PLC Class is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,712 in Torm PLC Class on October 3, 2024 and sell it today you would earn a total of 233.00 from holding Torm PLC Class or generate 13.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 99.8% |
Values | Daily Returns |
United Maritime vs. Torm PLC Class
Performance |
Timeline |
United Maritime |
Torm PLC Class |
United Maritime and Torm PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Maritime and Torm PLC
The main advantage of trading using opposite United Maritime and Torm PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Maritime position performs unexpectedly, Torm PLC 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 Torm PLC will offset losses from the drop in Torm PLC's long position.United Maritime vs. TOP Ships | United Maritime vs. Globus Maritime | United Maritime vs. Castor Maritime | United Maritime vs. Safe Bulkers |
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Check out your portfolio center.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.
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