Correlation Between LianDi Clean and First Ship
Can any of the company-specific risk be diversified away by investing in both LianDi Clean and First Ship 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 LianDi Clean and First Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LianDi Clean Technology and First Ship Lease, you can compare the effects of market volatilities on LianDi Clean and First Ship 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 LianDi Clean with a short position of First Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of LianDi Clean and First Ship.
Diversification Opportunities for LianDi Clean and First Ship
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between LianDi and First is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding LianDi Clean Technology and First Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ship Lease and LianDi Clean 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 LianDi Clean Technology are associated (or correlated) with First Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ship Lease has no effect on the direction of LianDi Clean i.e., LianDi Clean and First Ship go up and down completely randomly.
Pair Corralation between LianDi Clean and First Ship
Given the investment horizon of 90 days LianDi Clean is expected to generate 2.23 times less return on investment than First Ship. In addition to that, LianDi Clean is 1.3 times more volatile than First Ship Lease. It trades about 0.02 of its total potential returns per unit of risk. First Ship Lease is currently generating about 0.06 per unit of volatility. If you would invest 2.40 in First Ship Lease on January 25, 2024 and sell it today you would earn a total of 1.60 from holding First Ship Lease or generate 66.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 59.92% |
Values | Daily Returns |
LianDi Clean Technology vs. First Ship Lease
Performance |
Timeline |
LianDi Clean Technology |
First Ship Lease |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LianDi Clean and First Ship Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LianDi Clean and First Ship
The main advantage of trading using opposite LianDi Clean and First Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LianDi Clean position performs unexpectedly, First Ship 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 First Ship will offset losses from the drop in First Ship's long position.LianDi Clean vs. Indo Tambangraya Megah | LianDi Clean vs. Bukit Asam Tbk | LianDi Clean vs. Geo Energy Resources | LianDi Clean vs. Yancoal Australia |
First Ship vs. NeogamesSA | First Ship vs. SEI Investments | First Ship vs. Morgan Stanley | First Ship vs. Ubisoft Entertainment |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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