Correlation Between Box Ships and Orient Overseas

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

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

Diversification Opportunities for Box Ships and Orient Overseas

0.0

Correlation Coefficient

Box Ships  Orient Overseas

Pay attention - limited upside

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

Pair Corralation between Box Ships and Orient Overseas

Assuming the 90 days horizon Box Ships is expected to under-perform the Orient Overseas. But the pink sheet apears to be less risky and, when comparing its historical volatility, Box Ships is 4.68 times less risky than Orient Overseas. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Orient Overseas Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,707  in Orient Overseas Limited on January 17, 2024 and sell it today you would lose (483.00) from holding Orient Overseas Limited or give up 28.3% of portfolio value over 90 days.

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

Box Ships  vs.  Orient Overseas Limited

Box Ships

Risk-Adjusted Performance

0 of 100

Very Weak

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

Orient Overseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Overseas Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Box Ships and Orient Overseas

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

The idea behind Box Ships and Orient Overseas Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.