Correlation Between SHIP HEALTHCARE and TIANDE CHEMICAL

Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE and TIANDE CHEMICAL 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 TIANDE CHEMICAL 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 TIANDE CHEMICAL, you can compare the effects of market volatilities on SHIP HEALTHCARE and TIANDE CHEMICAL 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 TIANDE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and TIANDE CHEMICAL.

Diversification Opportunities for SHIP HEALTHCARE and TIANDE CHEMICAL

-0.53

Correlation Coefficient

SHIP HEALTHCARE  TIANDE CHEMICAL

Excellent diversification

The 3 months correlation between SHIP and TIANDE is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and TIANDE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANDE CHEMICAL 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 TIANDE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANDE CHEMICAL has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and TIANDE CHEMICAL go up and down completely randomly.

Pair Corralation between SHIP HEALTHCARE and TIANDE CHEMICAL

If you would invest  1,320  in SHIP HEALTHCARE HLDGINC on September 26, 2024 and sell it today you would earn a total of  10.00  from holding SHIP HEALTHCARE HLDGINC or generate 0.76% return on investment over 90 days.

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

SHIP HEALTHCARE HLDGINC  vs.  TIANDE CHEMICAL

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIP HEALTHCARE HLDGINC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

TIANDE CHEMICAL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TIANDE CHEMICAL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TIANDE CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SHIP HEALTHCARE and TIANDE CHEMICAL

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

The idea behind SHIP HEALTHCARE HLDGINC and TIANDE CHEMICAL 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.