Correlation Between MPC Container and SITC International

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

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

Diversification Opportunities for MPC Container and SITC International

-0.45

Correlation Coefficient

MPC Container  SITC International

Very good diversification

The 3 months correlation between MPC and SITC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MPC Container Ships and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International and MPC Container 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 MPC Container Ships 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 MPC Container i.e., MPC Container and SITC International go up and down completely randomly.

Pair Corralation between MPC Container and SITC International

Assuming the 90 days horizon MPC Container Ships is expected to under-perform the SITC International. But the pink sheet apears to be less risky and, when comparing its historical volatility, MPC Container Ships is 1.28 times less risky than SITC International. The pink sheet trades about -0.03 of its potential returns per unit of risk. The SITC International Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  227.00  in SITC International Holdings on September 14, 2024 and sell it today you would earn a total of  24.00  from holding SITC International Holdings or generate 10.57% return on investment over 90 days.

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

MPC Container Ships  vs.  SITC International Holdings

MPC Container Ships

Risk-Adjusted Performance

0 of 100

Very Weak

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

SITC International

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with MPC Container and SITC International

The main advantage of trading using opposite MPC Container and SITC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPC Container 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 MPC Container Ships 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.