Correlation Between COSCO SHIPPING and Matson

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

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

Diversification Opportunities for COSCO SHIPPING and Matson

-0.65

Correlation Coefficient

COSCO SHIPPING  Matson

Excellent diversification

The 3 months correlation between COSCO and Matson is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Inc and COSCO SHIPPING 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 COSCO SHIPPING Holdings are associated (or correlated) with Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Matson go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and Matson

Assuming the 90 days horizon COSCO SHIPPING Holdings is expected to generate 1.22 times more return on investment than Matson. However, COSCO SHIPPING is 1.22 times more volatile than Matson Inc. It trades about 0.05 of its potential returns per unit of risk. Matson Inc is currently generating about 0.01 per unit of risk. If you would invest  112.00  in COSCO SHIPPING Holdings on January 20, 2024 and sell it today you would earn a total of  2.00  from holding COSCO SHIPPING Holdings or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

COSCO SHIPPING Holdings  vs.  Matson Inc

COSCO SHIPPING Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSCO SHIPPING reported solid returns over the last few months and may actually be approaching a breakup point.

Matson Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matson Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with COSCO SHIPPING and Matson

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

The idea behind COSCO SHIPPING Holdings and Matson Inc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.