Correlation Between Hapag Lloyd and SITC International

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

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

Diversification Opportunities for Hapag Lloyd and SITC International

0.6

Correlation Coefficient

Hapag Lloyd  SITC International

Poor diversification

The 3 months correlation between Hapag and SITC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd Aktiengesellschaft and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International and Hapag Lloyd 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 Hapag Lloyd Aktiengesellschaft are associated (or correlated) with SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of Hapag Lloyd i.e., Hapag Lloyd and SITC International go up and down completely randomly.

Pair Corralation between Hapag Lloyd and SITC International

Assuming the 90 days horizon Hapag Lloyd is expected to generate 2.44 times less return on investment than SITC International. But when comparing it to its historical volatility, Hapag Lloyd Aktiengesellschaft is 2.03 times less risky than SITC International. It trades about 0.07 of its potential returns per unit of risk. SITC International Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,200  in SITC International Holdings on September 13, 2024 and sell it today you would earn a total of  495.00  from holding SITC International Holdings or generate 22.5% return on investment over 90 days.

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

Hapag Lloyd Aktiengesellschaft  vs.  SITC International Holdings

Hapag Lloyd Aktienge

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd Aktiengesellschaft are ranked lower than 5 (%) 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.

SITC International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SITC International Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, SITC International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hapag Lloyd and SITC International

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

The idea behind Hapag Lloyd Aktiengesellschaft and SITC International Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.