Correlation Between Global Ship and Atmus Filtration

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

By analyzing existing cross correlation between Global Ship Lease and Atmus Filtration Technologies, you can compare the effects of market volatilities on Global Ship and Atmus Filtration 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 Global Ship with a short position of Atmus Filtration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Atmus Filtration.

Diversification Opportunities for Global Ship and Atmus Filtration

-0.28

Correlation Coefficient

Global Ship  Atmus Filtration

Very good diversification

The 3 months correlation between Global and Atmus is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Atmus Filtration Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmus Filtration Tec and Global Ship 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 Global Ship Lease are associated (or correlated) with Atmus Filtration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmus Filtration Tec has no effect on the direction of Global Ship i.e., Global Ship and Atmus Filtration go up and down completely randomly.

Pair Corralation between Global Ship and Atmus Filtration

Assuming the 90 days trading horizon Global Ship Lease is expected to under-perform the Atmus Filtration. But the preferred stock apears to be less risky and, when comparing its historical volatility, Global Ship Lease is 3.07 times less risky than Atmus Filtration. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Atmus Filtration Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,748  in Atmus Filtration Technologies on September 28, 2024 and sell it today you would earn a total of  179.00  from holding Atmus Filtration Technologies or generate 4.78% return on investment over 90 days.

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

Global Ship Lease  vs.  Atmus Filtration Technologies

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Atmus Filtration Tec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atmus Filtration Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Atmus Filtration is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Global Ship and Atmus Filtration

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

The idea behind Global Ship Lease and Atmus Filtration Technologies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.