Correlation Between SosTravel SPA and Carnival

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

By analyzing existing cross correlation between SosTravel SPA and Carnival, you can compare the effects of market volatilities on SosTravel SPA and Carnival 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 SosTravel SPA with a short position of Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of SosTravel SPA and Carnival.

Diversification Opportunities for SosTravel SPA and Carnival

0.0

Correlation Coefficient

SosTravel SPA  Carnival

Pay attention - limited upside

The 3 months correlation between SosTravel and Carnival is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SosTravel SPA and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival and SosTravel SPA 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 SosTravel SPA are associated (or correlated) with Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of SosTravel SPA i.e., SosTravel SPA and Carnival go up and down completely randomly.

Pair Corralation between SosTravel SPA and Carnival

If you would invest  1,634  in Carnival on September 3, 2024 and sell it today you would earn a total of  909.00  from holding Carnival or generate 55.63% return on investment over 90 days.

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

SosTravel SPA  vs.  Carnival

SosTravel SPA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Carnival

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Carnival disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SosTravel SPA and Carnival

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

The idea behind SosTravel SPA and Carnival 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.