Correlation Between SHIP HEALTHCARE and Carlsberg

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

By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and Carlsberg AS, you can compare the effects of market volatilities on SHIP HEALTHCARE and Carlsberg 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 SHIP HEALTHCARE with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and Carlsberg.

Diversification Opportunities for SHIP HEALTHCARE and Carlsberg

0.66

Correlation Coefficient

SHIP HEALTHCARE  Carlsberg

Poor diversification

The 3 months correlation between SHIP and Carlsberg is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Carlsberg go up and down completely randomly.

Pair Corralation between SHIP HEALTHCARE and Carlsberg

Assuming the 90 days horizon SHIP HEALTHCARE HLDGINC is expected to generate 0.96 times more return on investment than Carlsberg. However, SHIP HEALTHCARE HLDGINC is 1.04 times less risky than Carlsberg. It trades about 0.04 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.08 per unit of risk. If you would invest  1,310  in SHIP HEALTHCARE HLDGINC on September 14, 2024 and sell it today you would earn a total of  40.00  from holding SHIP HEALTHCARE HLDGINC or generate 3.05% return on investment over 90 days.

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

SHIP HEALTHCARE HLDGINC  vs.  Carlsberg AS

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SHIP HEALTHCARE HLDGINC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SHIP HEALTHCARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Carlsberg AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlsberg AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with SHIP HEALTHCARE and Carlsberg

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

The idea behind SHIP HEALTHCARE HLDGINC and Carlsberg AS 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.