Correlation Between Sea Air and South Basic
Can any of the company-specific risk be diversified away by investing in both Sea Air and South Basic 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 Sea Air and South Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea Air Freight and South Basic Chemicals, you can compare the effects of market volatilities on Sea Air and South Basic 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 Sea Air with a short position of South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Air and South Basic.
Diversification Opportunities for Sea Air and South Basic
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sea and South is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sea Air Freight and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals and Sea Air 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 Sea Air Freight are associated (or correlated) with South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of Sea Air i.e., Sea Air and South Basic go up and down completely randomly.
Pair Corralation between Sea Air and South Basic
Assuming the 90 days trading horizon Sea Air is expected to generate 5.65 times less return on investment than South Basic. But when comparing it to its historical volatility, Sea Air Freight is 1.15 times less risky than South Basic. It trades about 0.05 of its potential returns per unit of risk. South Basic Chemicals is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,685,000 in South Basic Chemicals on September 17, 2024 and sell it today you would earn a total of 435,000 from holding South Basic Chemicals or generate 11.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Sea Air Freight vs. South Basic Chemicals
Performance |
Timeline |
Sea Air Freight |
South Basic Chemicals |
Sea Air and South Basic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sea Air and South Basic
The main advantage of trading using opposite Sea Air and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea Air position performs unexpectedly, South Basic 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 South Basic will offset losses from the drop in South Basic's long position.Sea Air vs. VTC Telecommunications JSC | Sea Air vs. Fecon Mining JSC | Sea Air vs. Saigon Viendong Technology | Sea Air vs. Petrolimex Insurance Corp |
South Basic vs. FIT INVEST JSC | South Basic vs. Damsan JSC | South Basic vs. An Phat Plastic | South Basic vs. Alphanam ME |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Commodity Directory Find actively traded commodities issued by global exchanges |