Correlation Between Carnival and SosTravel SPA

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

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

Diversification Opportunities for Carnival and SosTravel SPA

0.0

Correlation Coefficient

Carnival  SosTravel SPA

Pay attention - limited upside

The 3 months correlation between Carnival and SosTravel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and SosTravel SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SosTravel SPA and Carnival 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 Carnival are associated (or correlated) with SosTravel SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SosTravel SPA has no effect on the direction of Carnival i.e., Carnival and SosTravel SPA go up and down completely randomly.

Pair Corralation between Carnival and SosTravel SPA

If you would invest  1,615  in Carnival on September 4, 2024 and sell it today you would earn a total of  984.00  from holding Carnival or generate 60.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Carnival  vs.  SosTravel SPA

Carnival

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Carnival disclosed solid returns over the last few months and may actually be approaching a breakup point.

SosTravel SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SosTravel SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SosTravel SPA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carnival and SosTravel SPA

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

The idea behind Carnival and SosTravel SPA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.