Correlation Between COSCO SHIPPING and Hapag Lloyd

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

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

Diversification Opportunities for COSCO SHIPPING and Hapag Lloyd

0.64

Correlation Coefficient

COSCO SHIPPING  Hapag Lloyd

Poor diversification

The 3 months correlation between COSCO and Hapag is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings 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 COSCO SHIPPING 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 COSCO SHIPPING Holdings 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 COSCO SHIPPING i.e., COSCO SHIPPING and Hapag Lloyd go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and Hapag Lloyd

Assuming the 90 days horizon COSCO SHIPPING Holdings is expected to generate 0.86 times more return on investment than Hapag Lloyd. However, COSCO SHIPPING Holdings is 1.17 times less risky than Hapag Lloyd. It trades about 0.11 of its potential returns per unit of risk. Hapag Lloyd Aktiengesellschaft is currently generating about 0.05 per unit of risk. If you would invest  604.00  in COSCO SHIPPING Holdings on September 12, 2024 and sell it today you would earn a total of  127.00  from holding COSCO SHIPPING Holdings or generate 21.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

COSCO SHIPPING Holdings  vs.  Hapag Lloyd Aktiengesellschaft

COSCO SHIPPING Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, COSCO SHIPPING showed solid returns over the last few months and may actually be approaching a breakup point.

Hapag Lloyd Aktienge

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd Aktiengesellschaft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hapag Lloyd reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COSCO SHIPPING and Hapag Lloyd

The main advantage of trading using opposite COSCO SHIPPING and Hapag Lloyd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSCO SHIPPING 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 COSCO SHIPPING Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.