Correlation Between Nasdaq and COSCO SHIPPING

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

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

Diversification Opportunities for Nasdaq and COSCO SHIPPING

0.1

Correlation Coefficient

Nasdaq  COSCO SHIPPING

Average diversification

The 3 months correlation between Nasdaq and COSCO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and COSCO SHIPPING Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Energy and Nasdaq 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 Nasdaq Inc are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Energy has no effect on the direction of Nasdaq i.e., Nasdaq and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Nasdaq and COSCO SHIPPING

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the COSCO SHIPPING. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 2.38 times less risky than COSCO SHIPPING. The stock trades about -0.19 of its potential returns per unit of risk. The COSCO SHIPPING Energy is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  79.00  in COSCO SHIPPING Energy on September 27, 2024 and sell it today you would lose (3.00) from holding COSCO SHIPPING Energy or give up 3.8% of portfolio value over 90 days.

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

Nasdaq Inc  vs.  COSCO SHIPPING Energy

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

COSCO SHIPPING Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, COSCO SHIPPING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq and COSCO SHIPPING

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

The idea behind Nasdaq Inc and COSCO SHIPPING Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.